Ok, I’ve been getting more questions about fiat money than I can handle, so I hope this post helps to clarrify any mis-understandings.
Fiat Money is any thing that is declared money by law. In the United States, all money is fiat money, including all coins and currency issued by the United States Government and including Federal Reserve Notes which are not issued by the government.
Most people claim that fiat money is paper money not backed by gold or silver. Other people define fiat money as things that are used for money that has no other value except being a medium of exchange because the government and the courts sanction it’s use.
Money in and of itself does not occur naturally. It does not reproduce itself by breeding or by sprouting from seeds. Money stems from a manufacturing process. As such all money is Fiat in nature, and only becomes money by law, including gold and silver coins because a law set the weight and purity of the coins. Webster’s New World Dictionary -Fiat- An order issed by legal authority.
Most money is a combination of substance and symbol. Commodity money is as much substance as symbol. Paper money is more symbol than substance.
What we use for money today, book-entry bank liabilities, is all symbol with no substance. And believe it or not, there is no law that declares book-entry bank liabilities as dollars, money, legal tender, or anything else. It is truly money by common mental deception and enforced as law by our corrupt court system.
. As such all money is Fiat in nature, and only becomes money by law, including gold and silver coins because a law set the weight and purity of the coins. Webster’s New World Dictionary -Fiat- An order issed by legal authority.
Gold as money does not require laws. Its use as money recently sprang up on its own in Zimbabwe apparently. There a link somewhere here to a you-tube vid that was posted a while ago which showed people trading gold dust for goods on a weight basis )
When the govt steps in and determines the design and mints the gold coins, that is the beginning of the risk. Historically governments have debased gold coins by reducing their size then their alloy content while leaving it looking like the 1 ounce coin pure gold coin that it started out as. Once they push it too far, people catch on and stop accepting the debased coins as having the same "value" as an original gold coin……
The people there are bartering with the gold.
Clearly trying to use gold for money is working very, very well there. A nice shortage of ‘money’ really makes their lives so much better. We need to go back to the gold standard here in America. I can’t wait!
We could fix our monetary system back to an evidence of wealth, get rid all of the debt, and let prosperity flourish throughout this great country once again. If the Zimbabwe people had a monetary system that benifited the people(a wealth based currency) they would have never had such an economic disaster, but instead they have an economic system based on the exact same principles as the system we have here. It’s all designed to strip all the wealth from the producers and transfer it to the non producers. A monetary system that represents what you owe at the bank, and not your production.
P.S. The zimbabwe government, just like our government, doesn’t create any coin or currency in circulation, only the private bankers do it by offering loans to their customers. What really destroyed the money in their country was when the bankers decided to raise the interest rates to 800%. Keep in mind the private banks are their only source of money.
May I suggest you read this article put together by a friend of mine.
I think the public should be allowed to use Fractional Reserve Banking on their Credit Cards.
ex. say you have 10,000 in CC debt. You (consumer) send the credit Card company a check for 15,000, 5000 more than you owe, even though you have only 2000 in your account. Then you tell the credit card companies to pay you back 5000 plus 28.99% interest, see how they like it. Think about it. The CC companies get their money back, you get a return on debt payment and investment.
Just a thought. Why not? We change the rules all the time. We went from a Constitutional Republic to a Democracy/Oligarchy government, and a debt free banking system to a money as debt (screw the people) banking system. Let’s all rewrite the rules for the benefit of the consumer. If the money supply gets out of hand then we will just LIE about how much is in real circulation, just like the fed does.
Maybe in Fantasy Land.
Thanks for the great laugh! – and it’s all the more funny because your logic is valid, why not let us all operate as banks?
Thomas Hedin and Hamish,
I just got done responding to the same question in another thread – if you’re interested, please check this link
Because if all everyone did was just create money there would be no production, and our society would collapse.
I was joking around Thomas, because it would be fun to Screw the CC companies like they do to everyone.
People would still produce. After everything is gone, our new incentive would be to produce. If everything was consumed money would have no value. So the new incentive of production would take form.
I could see Larry David do that credit card / fractional reserve banking example about for an episode of Curb your Enthusiasm. Now that would be funny
How could you possiblely screw the credit card companies when all they loaned you was a promise to pay? How could you possibley hurt them when they didn’t loan you anything in the first place?
Also, they could just write numbers as an investment and pay off their debts(which they do). The only way we are going to hurt them is by destroying their monopoly and priviledge of creating money as loans, and in the process we can return liberty to America.
OMG Thomas it’s a joke. Think on the lines of Larry David. I’m Joking. Just saying it would be funny to screw the CC companies.
just joking around. we need to laugh once in a while.