Don’t Blame the Fiat

Fiat money is not the root of our problems. Any money, be it gold, rubies, unobtanium is easily corruptible when the government has a share in the game. See, if you bring a gold coin to the bank, and the bank then lends this coin, there are now 2 gold coins in the economy. It doesn’t matter what the coin is made of; what matters is whether the law (a) allows it and (b) is enforced.

As long as there is authority, it will be the target of corruption. Money will keep merging with power and laws will keep being trampled down. After all, the party that should be enforcing the law is actively breaking it: “Questions? Complaints? Shove them, we’re busy robbing you.

Solution? Authority or money, choose one.

7 comments to Don’t Blame the Fiat

  • acjitsu

    We need to have both traditional legal principles and sound money. That is the answer. Jesus Huerta de Soto wrote a great book called “Money, Bank Credit and Economic Cyclest” which explains this exceptionally well.

  • Ben

    I would never blame the Fiat….I might blame the Audi or the BMW…perhaps even the Mercedes…but never the Fiat. That thing runs like a top.

    *pause*

    *wait for it*

    BWAHAHAHAHAHAHA….oh I crack myself up.

    I am sorry, I could not resist.

    Acutally Mustafa that has to be the best explaination of how fiat currency works. It is direct, simple and brilliant in it’s message. I don’t think enough Americans understand how the monetary system works.

    Good stuff.

  • Joe (Well-Armed Lamb)

    It is certainly true that the first “money changer” and “usury agents” used gold.

    ANY situation can be exploited. That’s why it’s going to take more than “simply” ending the Fed and moving to silver or gold. That’s a good start, but it IS just a start.

    Peace,

    Joe

  • twisted titan

    of course you can’t be fiat

    your punish the purveyours of fiat

    that is why on the back of local continetal script is said in big red letters

    TO COUNTERFEIT IS DEATH

    that is how serious the power to print money way held by the educated masses

  • Prudentis

    @Mustafa:
    “See, if you bring a gold coin to the bank, and the bank then lends this coin, there are now 2 gold coins in the economy”

    Gosh, no there aren’t. This is accomplished through double accounting and is a zero sum game. Please research this before you tell nonsense like this.
    Bringing a coin to a bank is (ignoring principal) a debit on the bank side and a credit on the client side. The sum is 0
    The loan is a credit on the bank side and a debit on the client side. Again the sum is 0.

    The real problem is the existing growth paradigm.

    Monetary policy is constructed in a way, that growth is a necessity. There are no scenarios for stagnation or a shrinking economy. That is unnatural and I know of only two other things in the universe, that follow the same paradigm and it is the virus and cancer.
    So instead of our economy being based on living, sustainable patterns like trees or better yet, whole ecosystems, we have an economy based on cancer.

    I do agree however, that a strong government is one of the biggest problems of the world.

    Real free markets are one part of the solution. The second is a monetary system that reflects real free markets AND the correcting forces of free markets and isn’t based on perpetual growth. The last is a government with fixed authority that it will be unable to overcome.
    I admit, that the latter two are kind of utopian and I don’t have ideas yet, how to implement them.

  • Mustafa, kindly provide us with a better reason to why you are of the opinion that gold “…is easily corruptible when the government has a share in the game.”

    The answer that you’ve given is simply not correct: “See, if you bring a gold coin to the bank, and the bank then lends this coin, there are now 2 gold coins in the economy. It doesn’t matter what the coin is made of; what matters is whether the law (a) allows it and (b) is enforced” – No, you cannot turn 1 gold coin into 2 of the same purity and quantity. You can at best give a false fiat paper promise that more than one of the very same coin exists. We’re aiming for a monetary system with ZERO fiat money of any form, no interest charged on loans, a fixed tax rate of 10%, etc. The very same gold coin that goes into the bank, considering that the relevant bank does lend out money, will be loaned to someone. It will not turn into two coins as promised by so many Nigerian scamsters down here in South Africa – except of course if you’re in love with a worthless paper promise, loving the scent of a scam.

    In addition,why do you write: “Fiat money is not the root of our problems”?

    Have you read Mr. Ralph T. Foster’s “Fiat Paper Money – The History and Evolution of Our Currency”? Certainly not, because it provides ample proof that the statements you make are simply not correct (to state it mildly!).

    Fiat paper promises will not be tolerated in the society that we’re aiming for, especially when it comes to efforts to turn it into money (or to make people believe that it is money!). Advocates or supporters of fiat money in any form will be shot on sight. The very foundation of freedom will not be compromised again. Those who think otherwise are welcome to create a society of their own, but it will not be tolerated in ours.

  • Mustafa Cohen

    @ Paul Maritz:

    >> The answer that you’ve given is simply not correct […] No, you cannot turn 1 gold coin into 2 of the same purity and quantity.

    You have your coin in the most honest, transparent, straightforward bank in the Universe, and someone else has the same coin lent to her by the bank at 0%. You can both, at the same time, bid against each other in an auction, for example, – because you both are confident that you own 1 gold coin each.

    >> We’re aiming for a monetary system with ZERO fiat money of any form, no interest charged on loans, a fixed tax rate of 10%, etc.

    1. “We” being who?

    2. The authority that you want to run this ideal situation will inevitably, invariably become a tyranny. Keywords: “any authority”, “inevitably”. Rake. Step.

    >> Have you read [yet another book that explains everything perfectly, no you don’t understand, this one really, REALLY nails it, you _must_ read it, or you will be looked down upon by so very important Me Who Has Read It] ?

    I have read way more than I want to have read. Let me, in turn, ask you: Have you thought?

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