this post was submitted on 08 Jun 2023
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I think no one would be better off if the banking systems collapse. We needed some reforms, including the fractional reserve system (I'd celebrate the comeback of the gold standard, for example), but no disaster, please.
Absolutely, I really couldn't agree more. In my humble opinion, however, it's not the power of currency to a very few people but rather the power of the only currency to a very few people which is bad.
This is why I'd say -once again- we need complementary currencies. Each of them will have its own drawbacks, but with a universe comprising fiat money and many alternatives at the local, national and maybe even global level for different use cases we'd be all better off imho.
Yeah, fiat is not the answer imo because of its very definition.
A dictate requires men with guns who will threaten to end your life or throw you in a cage to enforce it.
I would rather not see a bank collapse, but i doubt people will learn in any other way besides pain. We absolutely need a seperation of money and state. Gold provides that in the physical world for sure, but you cant transmit gold over the internet to pay for your amazon order. This is why we need a cryptocurrency such as Monero
Fiat means decree, and fiat money is a currency that is decreed and backed by the government that issues it, meaning it is not backed by a commodity, such as gold or silver. This kind of currency has a short history as it arrived only in the 20th century (the only exemption were a few years in the 1860s in the US during the civil war, but that aside, fiat money was unknown in human history before 1913/14).
It has its name by the absence of this backing, but it has nothing to do with a threat to end one's life or a cage or something.
Fiat currency is not new, and far older than the US. Rome is the oldest example I could find of a fiat currency system, but there are nations. Eg. Bank of Amsterdam 1683 is earliest of recent history.
we could split hairs and say that these early forms of fiat aren't "exactly the same as the current form of fiat we know today", but we as society have a long history of government making decrees about money and backing them with force.
Even the Roman money -although it was issued by a central authority- was backed by gold, silver, bronze and other commodities, at least partially (inflationary debasement of coins became an important feature over the centuries).
But, yes, to a high degree this is hairsplitting, and you may agree that comparing currency systems of different historical epochs doesn't make sense as their economies and societies are too different for such a rough comparison.
What I say is that our current fiat currency system -the one we have since 1971- is unique in that it is largely created by banks themselves: The money volume created by the fractional reserve system is much larger than the volume printed by the central bank (~ ten times). This is unique in history to the best of my knowledge, l don't know of a similar example. And imo it is a huge part of the current financial problems we have been facing for some time, including the problems described in the linked article.