F.I.F.I.D. - Faith In Fiat Is Dying

Faith In Fiat Is Dying. And I couldn't be happier about it.

I know, that sounds cynical, but can you blame me? After watching what's taken place over the past two decades, it's hard to have an optimistic viewpoint about the direction of the US Dollar.

It's not just because it's devoid of intrinsic value and has no backing in sound, hard money. It's not just because I can't use it to purchase goods or services in most other countries. Banks in other countries store their own respective fiat currencies, they don't want their customers using other currencies, it makes their lives more difficult, and besides, the entire system of central banking is predicated on the segregation and compartmentalization of finance, restricted by geographic location.

Without restricting the flow and direction of value, central banks would have no way to ensure their control over the money supply of their respective nation-states that they dictate to. Imagine if you could hop across the border from Canada, and take your over-valued Canadian Dollars and spend them in American stores. Why would you be incentivized to get US Dollars to spend if you could just...use your own currency?

This has been the root problem of fiat currency all along, there is no way to actually fully control a physical currency. What happens, is the black market for Foreign Currency sprouts up and thrives, let's use Venezuela as an example. The largest issue with Venezuela's fiat currency, is that no one wants it, no one trusts it, and no one saves it. The Venezuelan Bolivar is one of the worst-performing fiat currencies vs the US Dollar in recent memory. Of course, there are worse alternatives (Zimbabwean Trillion Dollar notes, anyone?), but, in Venezuela, the residents want US Dollars. US Dollars have a much higher purchasing power within Venezuela than the Bolivar.

How did this come to be? Shouldn't the Bolivar have more purchasing power in the country within which it was created to control? Wouldn't that make logical sense, that, a foreign currency would have less power than the domestic? Well, Nicolas Maduro certainly does not understand the basic concept of fiat currency in the first place. If you want people to use a currency, you have to convince them to trust that it will purchase the same amount of things one day as the next.

Anyone with a reasonably-basic understanding of how money works, knows that paper currency has no value, regardless of the country you look at. Venezuela is no different, because the people who still live there are just like people everywhere else. Mothers want to be able to acquire food and clothing for their children. Fathers want to be able to afford to pay for fuel to fill their cars' tanks up. People are not naturally willing government servants, they are pushed into the role by lack of opportunity in the private sector.

The backbone of the economy in the United States has always been the middle class. The greatest period of economic expansion in the history of the nation was the post-WWII period, from around 1948 until 1961, when things really started to hit the fan. The returning GIs got full benefits upon returning, those benefits paid for the creation of a decent standard of living for tens of millions of people. It was the largest increase in household wealth in the pre-1971 era, as far as I know. More people became comfortable, more came out of poverty, than at any prior time in US history.

Without that middle class the GI Bills created, the US economy couldn't have taken off as the global leader like it did. After World War II's European theatre ended armed fighting, the majority of the continent was in financial ruin. Every country had it's own separate fiat currency. None were backed with real, sound, hard money. The British Pound Sterling was originally named because it was declared to be worth the equivalent of 240 silver pennies, weighing one pound weight of silver. It's been a long time since the British had real money. The US Federal Reserve formally removed new silver from the circulating money supply before the death of the Gold Standard at the hands of Richard Nixon.

The 1971 elimination of hard money from the US money supply was the death knell for the purchasing power of the US Dollar. Without any backing by hard money, the Dollar was morphed into a purely paper currency, devoid of intrinsic value. After that fateful year, savers in the United States lost their purchasing power at an accelerated rate, year-after-year. Many Americans alive today who lived through the 1970s speak of it as if it were the Dark Ages. For many people, it was, though. The Dollar lost its backing, the US Federal Government defaulted on all its debts, especially all that was owed to European countries, further dragging them all down to the Dollar's level trust-wise.

Fast-forward 51 years, and where does this all leave us?

A massive population of over 330 million people are pushed to accept and use the US Dollar as forms of payment. What most people don't realize, is that, they aren't using money to pay for things. They are using debt.

Credit is debt. Cash is an IOU. Debit Cards take debt from your debt-based checking account to procure paper IOUs. Everything in fiat is debt-based. There is no hard money left, not a single country uses hard money for official business. Fiat currency dominates the world, whether anyone wants them to or not.

There's a silver lining though! Faith In Fiat Is Dying. After over 109 years, people are finally waking up to reality. Their savings accounts yield them nothing, while banks make 1-3% interest from lending out their "debt." The banks create debt every time they loan money to anyone, whether an individual or a corporation. Everything is debt. Without debt, the system would collapse, because there's nothing else holding it up. If other governments and banks didn't owe the US Federal Reserve and Treasury any debt, there would be a much lower demand for US Dollar debt notes.

Because the US Dollar is the world's reserve currency, every other country is forced to buy US Dollars from private banks in order to exchange US Dollars for the fiat currency of a country it is wanting to trade with. All commodities in the world are traded in centralized markets that are denominated in US Dollars. You cannot buy gold futures contracts in Euros. You cannot buy silver futures contracts in Rubles. You have to use US Dollars. This forced-use isn't a use-case, itself. It's coercion, a blatant violation of the Non-Aggression Principle, which helps maintain natural order.

Since Faith In Fiat Is Dying, it is our responsibility to educate the public as to how they are currently being exploited, and how they can take control of their own financial lives and remove extortionists and middlemen from stealing their hard-earned wealth.

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