“Fiat money is an intrinsically useless product, used as a means of payment.”
Source - http://en.wikipedia.org/
Source - http://en.wikipedia.org/
Every nation today is using fiat money backed by debt. Fiat = money by decree some entity has to enforce it via regulation or law. Fiat money can come in different forms. Debt based fiat money is the current form today enforced by central banks around the world. The fiat money model today originated with the Bank of England in 1694. Fiat money is borrowed into existence and then interest is owed back to central banks.
The fiat money model simplified... We find some trees - make some paper - find a printing press - put a nice design on some paper - add some ink - add some #'s - enforce some laws to make fiat money legal.
Fiat money = debt. Debt = borrowing. Borrowing = interest (funny money for banks). No debt/borrowing = no money!
Further explanation of fiat money in action today
Centrals banks are private monopoly perpetual debt machines that lend fiat money to whomever living souls will borrow their debt and pay interest back to them. Continuous debt is the tool to keep economy afloat. Banks must attract as many people as possible to go into debt to borrow fiat money so they can collect interest. This explains why you'll get a million credit cards offers in the mail. Central banks enhance their wealth by simulating commercial banks to make loans (risky) to collect as much interest as possible. All banks are essentially bankrupt from the first loan they make because they don't have the 100% reserves to cover the promises they loan out. Fiat money is loaned to banks. Banks only lend promises back by a signed document, without a signed document and loaned deposits to banks there is nothing to lend.
Central banks lower interest rates to simulate as much borrowing to keep the economy afloat. Citizens assume their getting a great deal to buy goods/services when really it is encouraging citizens to borrow and pay interest to banks to keep the fiat money game going. A delay between new loans being created and repayment/interest being collected allows for systematic failure of the system to be postponed. Reason I say postponed is because eventually exponential growth catches up. 2008 was a brief preview when two of the top 5 banks went under: Lehman Brothers & Bear Sterns. Risky loans caught up to these two banks the repayment of interest on loans could not be made.
Propaganda babble informs us to save the system we must bailout the banks. Taxpayer fiat money foots the bill. Central banks must continue to issue/buy their own debt to keep fiat money alive. If the public opts for other forms of payment, fiat money would go to its intrinsic value of zero.
Fiat money throughout history becomes worth-less and worth-less until it is worthless! All have ended up being an ancient artifact. Fiat money should serve as a learning lesson... a lesson not taught in the conventional wisdom arena's such as old school financiers, public schools & universities. Fiat money value derives solely on trust & confidence which has always eventually faded away.
For examples of different forms of fiat money in the U.S read article below: Rock-Paper-Silver!
