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How
Fiat Money Will Destroy America
We’ve
warned readers prepare for what’s about to hit America.
Riots, flash-crashes, more drastic
central bank intervention... it’s all in the cards…along with Democrat
monstrous deficit spending ehich is always tasty to the public in the SHORT Run
but as Margaret Thatcher wanred: Socialism is fine until you run out of other
people’s money.
Economist
Saifedean Ammous wrote the best bitcoin book out there, called The Bitcoin
Standard. And it’s not even about bitcoin.
The vast majority of the
book is about the dastardly effects of unsound money.
“Human civilization,” he
writes, “flourished in times and places where sound money was widely adopted,
while unsound money all too frequently coincided with civilizational decline
and societal collapse.”
Rome, Constantinople,
Florence, Venice… the story is the same. If history is any guide, a sound
monetary standard is a necessary prereq for human flourishing, says Ammous,
“without which society stands on the precipice of barbarism and destruction.”
Moreover, history reveals
it’s impossible to protect yourself from the consequences of others holding
money that’s harder than your money.
In the end, the hardest
money wins.
“It is ironic, and very
telling,” he points out, “that in the era of government money, governments
themselves own far more gold in their official reserves than they did under the
international gold standard of 1871–1914”
While governments hold hard
money, good at maintaining its value, the masses hold fiat, poor at maintaining
its value.
Money informs psychology.
Its architecture incentivizes behaviors, often subliminally, right below the
curtain of consciousness.
“The better the money is at
holding its value,” says Saifedean, “the more it incentivizes people to delay
consumption and instead dedicate resources for production in the future,
leading to capital accumulation and improvement of living standards”
Fiat money, on the other
hand, does the opposite. It incentivizes people into short-termism, planned
obsolescence, disposability, and instant gratification. Sound money makes for
good ancestors. Unsound money makes for bad ancestors who sell out future
generations for short-term gains.
It destroys culture and
communities. It creates the cutthroat environment many people attribute to
being an inherent feature of capitalism. It infects everything with its
fakeness. It creates fake societies, fake ideas, and fake people.
Worse? It concentrates
power in the last place you would want power to be.
How
Fiat Destroys Culture
By Stephan Livera
Can the type of money
change the culture of a society? This might seem like an absurd proposition,
but it is supported by the arguments of proponents of the Austrian school of
economics.
First, let’s contextualize
the importance of sound money as opposed to fiat money. Mises notes in The
Theory of Money and Credit: “It is impossible to grasp the meaning of the
idea of sound money if one does not realize that it was devised as an
instrument for the protection of civil liberties against despotic inroads on
the part of governments.“
Fiat money has never arisen
through purely voluntary market actions. It has always been coercively imposed
via interventions such as legal tender laws, capital gains tax laws, central
banking, laws permitting fractional reserve banking, government bailout
guarantees, etc. This causes degeneration in the quality of money used by
society. But are there cultural consequences of this?
To see the cultural
consequences, we must first understand the pivotal role money and prices play
in coordinating production across society. Entrepreneurs must act under
uncertainty to gather the required resources to offer their goods and services.
And yet money, their unit of account, for measuring profit and loss, is being
manipulated by the government. Money is created as new loans are issued by
commercial and retail banks, and the first recipients of that money benefit at
the expense of late recipients.
Using money with continual
inflation encourages short-termism and haste. We live more like animals in the
wild. Animals in the wild care mostly about their next meal, rather than
thinking, planning, and building for the long term as humans can do when we’re
at our best.
Consider the counterfactual
world of living under sound money, chosen by the market. In this world, how
does the state fund large programs? It must openly tax citizens, and for this,
politicians pay a high price in lost popularity and risk losing their next
election. Instead of explicit taxation, politicians inside the government will
prefer to use more hidden forms of funding for their programs. In order to do
this, they must first remove the check of sound money.
Going one step further, the
creation and enforcement of fiat money enables larger and more centralized
government. Large government programs become possible that were not possible or
sustainable under a market-chosen, sound money standard.
Consider the impact of
profligate spending under a market-chosen monetary standard. In the past, this
meant that governments spending big and living large were subject to net gold
outflows to other countries.
While many like to think of
government programs and welfare statism as a "safety net" for
society, consider that these programs fundamentally drive the wrong behaviors.
Where historically, non-government-based mutual-aid societies promoted a
culture of self-reliance and thrift, government welfare states promote the
opposite, the end result being that government programs remove the safeguards
that a market society would have. In this way, fiat money frees people from the
prior "restraints" of polite society, with expectations for
productive and civil behavior broken.
Freed of prior constraints
that families, religion, and communities used to impose, people often turn to
more short-term gratification. They may engage in more reckless behavior that
previously would have had economic consequences, such as the cost of raising
children. Fiat inflation forces people to invest in just about anything rather
than save in fiat cash, driving more money and debt as leverage through the
financial services sector than otherwise would be the case.
With cheap fiat debt,
governments may more cheaply engage in warfare or sustain warfare for longer
than they otherwise could have. Cheap fiat debt essentially provides the
government with command over more of society’s resources than it otherwise
would have had.
For readers interested in
learning more, I highly recommend reading Jörg Guido Hülsmann’s The Ethics of Money Production,
and watching his lecture here on the Mises Institute YouTube
channel.
How could this situation be
rectified? If the world were to transition back to market-chosen money, such as
gold or bitcoin, we would see the discipline of the free market reassert
itself. Until then, let’s recognize the ways that society and culture have been
greatly influenced by government fiat money.
Stephan Livera
This article originally
appeared on the Mises Institute blog right here.
SIDEBAR
Wokeness=Asleep at the wheel…Don’t be SUCKERED!
If you've been prepping for more than, say, a day, you know to
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