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25 January 2021

The Fiat Standard and Debt Slavery - CoinDesk

The Fiat Standard and Debt Slavery - CoinDesk


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Temporary arrangements restricting note convertibility into gold have turned into the permanent financial infrastructure of the fiat system that took off over the next century.

While the global fiat system so far avoided the complete collapse its detractors would predict, that doesn’t make it a free-lunch-maker with no opportunity cost or consequence.

More than fifty episodes of hyperinflation have taken place around the world using fiat monetary systems in the past century, according to the work of economist Steven Hanke.

Between the relentless propaganda of its enthusiasts and the rabid venom of its detractors, this book attempts to offer something new: an exploration of the fiat monetary system as a technology, from an engineering and functional perspective, outlining its purposes and common failure modes, and deriving the wider economic, political, and social implications of its use.

My aim is to explain the operation and engineering structure of the fiat monetary system and how it operates, in reality, away from the naive romanticism of governments and banks who have benefited from this system for a century!

While fiat systems have not won acceptance on the free market, and though their failings and limitations are many, they have facilitated an unfathomably large number of transactions and trades all around the world.

Its continued operation makes understanding it useful, particularly as we still live in a world that runs on fiat.

Attempting to think of the fiat monetary system in engineering terms and trying to understand the problem it solves have resulted in giving me an appreciation of its usefulness, and a less harsh assessment of the motives and circumstances which led to its emergence.

Understanding the problem this fiat system solves makes the move from the gold standard to the fiat standard appear less outlandish and insane than it had appeared to me while writing “The Bitcoin Standard,” as a hard money believer who could see nothing good or reasonable about the move to an easier money.

This attempted suspension of the concept of opportunity cost makes fiat a revolt against the natural order of the world, in which humans, and all other animals, have to struggle against scarcity every day of their lives

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