In “The Fiat Standard” Saifedean Ammous defines fiat currency as: A compulsory implementation of debt-based centralized ledger technology monopolizing financial and monetary services worldwide. In other words it’s government money, that we have no choice but to use. And instead of being a commodity with some market value in itself, fiat currency itself is based […]
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The longest lasting fiat currency in history is the Great British Pound. The pound dates back to 928, making it the oldest currency still in use, although it has only been a fully fledged fiat currency since 1971. Initially defined as a weight of silver, the pound became a fiat currency briefly in 1745 due
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Fiat currency is a type of currency that exists only by government decree. It refers to the nature of the currency being untethered to a commodity with new units being easily created at will. Legal tender is a status that a government bestows on a currency, stating that it must be accepted by merchants and
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The history of fiat currency is a history of failed experiments. Authorities have sought to utilise the flexibility it gives their finances, but have often mismanaged it and brought catastrophe. While fiat currency is the norm today, it has been less common in the past. Throughout much of human history, society has used some form
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Do all fiat currencies go to zero? History says that they do and common sense suggests that on long enough timeline the failure of every fiat currency is inevitable. Even Charlie Munger thinks so: “The safe assumption for an investor is that over the next 100 years the currency’s going to zero.” When you understand
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The Renminbi translates to “people’s currency” and is the currency issued by the Communist Party of China. The term Renminbi refers to the name of the currency in the broad sense, while yuan is the name of one unit of currency. The Renminbi was first issued towards the end of the Republic of China in
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Fiat currency, or government issued currency, is bad for many more reasons beyond the obvious one – that it loses purchasing power due to inflation and eventually goes to zero. It has many other negative characteristics that cause economic, political and social problems. However, first it is important to acknowledge the one benefit of fiat
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The short answer is that fiat currency is backed by the government that issues it. That is the nature of what a fiat currency is – something that the government, not the market, has deemed to be money. The government declares the fiat currency to be legal tender and mandates that its population pay their
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The history of U.S. currency begins with the foreign money of the colonial era and ends with the fiat standard of the post 1971 era. The Federal Reserve Notes that currently circulate as U.S. currency only became the exclusive legal tender of the United States in 1971. Before that, the United States had a number
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Key Takeaways The history of fiat currency failures reveals a very predictable pattern. The government starts with a small issue of paper money, thinking that they will just use it the once. Then they use it a second time. Then another and another, and another. Soon they are addicted. The government eventually prints too much,
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