The history and properties of FIAT money – 2nd part

After 1971, the world ultimately switched to the fiat standard, that is, to the era of easy, unreliable money, controlled by various authorities, which constantly increase its supply. Since currencies were no longer tied to gold, the decision was made that most countries keep their foreign exchange reserves in dollars as the strongest national currency, while at the same time exchange rates between currencies can fluctuate deliberately. With this, we entered the era of free-floating currencies, which were constantly devalued by the authorities, thereby reducing and changing their market value. Exchange rates between currencies were thus no longer fixed to the dollar, but changed from day to day, thus creating the need to coordinate exchange rates and establish a foreign exchange market where foreign currencies could be bought and sold at market prices. Switzerland was the last country to leave the gold standard as late as 1999, so its economy is still stronger today than most of the countries that did it before.

The consequences of abandoning reliable money were enormous. Accelerated inflation was the source of many market bubbles and caused increasingly severe business cycles, which in turn led to the redistribution of capital and its concentration in the hands of financial elites, and on the other hand caused economic devastation. In extreme cases, when inflation got out of control, many countries experienced its worst form, i.e. hyperinflation. Hyperinflation as an economic phenomenon did not exist before the beginning of the 20th century and in the absence of fiat money. The only historically recorded instance of hyperinflation before the 20th century occurred in France, as a result of attempts to establish a fiat system under the leadership of John Law, known as the father of fiat money. The consequences of his careless and opportunistic behavior led to the French Revolution.

 PLUNGING STANDARD OF LIVING

The consequences of the fiat system are not limited to the economic sphere, but its tentacles reach much further. Most of the state policy after the abandonment of the gold standard can be understood as constant attempts to hide the fact that the devaluation of the currency leads to a decrease in the purchasing power of its users, or a redistribution of it to the hands of the first recipients of the newly created money units. In practice, this means a constant increase in market prices, which is most noticeable in goods with the highest demand. Food, energy products, real estate and many other key elements of our lives experience the fastest price growth, which the government always manages to cover up through its strongest propaganda media – statistics and science.

By funding science with taxpayer money, the government gains incredible power to bend reality. If the price of energy rises too much, the authorities provide many studies that show that these energy products are harmful to the environment and that we must replace them with inferior alternatives, whose offer is co-financed by them, thereby covering up their cost. Also, food, the supply of which is more difficult to increase and thus its price increases faster with currency devaluation, the government uses science to replace it with cheaper, industrial food, the supply of which can be increased at much lower costs. Meat thus becomes harmful to health, and is replaced by vegetable oils and soy patties. That the explosion of obesity and cardiovascular diseases is the result of this is a mere coincidence, the cause of which cannot be linked to the fact that our bodies are consuming completely new and artificial food, for which evolution did not prepare us.

There are many more such and similar examples, but they also extend into the fields of architecture, music, culture, ethics, art, education, family relations and the like. The story repeats itself: because quality things become too expensive due to falling purchasing power, we have to replace them with cheaper and worse substitutes. Cathedrals are thus replaced by unstable socialist monuments, symphonies are overshadowed by popular songs, culture is replaced by ideology, ethics are devalued, art loses its charm, education turns into propaganda, and family relationships become scarce when both parents are absent due to work.

On the broader social front, the battle between voluntary exchange and forced alienation of property is also taking place. In the absence of hard money, trade stagnates, and in its place, armies cross national borders to seize foreign property by violence. If goods cannot cross national borders, soldiers will. A fiat system enforces war instead of peace.

THE WAR

In the second half of the 20th century and in the 21st century, we could witness many wars between the United States and other countries, either directly or indirectly. Directly, the USA was in a cold war with the Soviet Union, Syria, Libya, Iran, Iraq, Vietnam, Afghanistan, etc. Indirectly, it fought similar battles through its satellite countries under the auspices of NATO.

The war using easy money does not only include the traditional form of warfare with soldiers and weapons, but includes all cases of fighting against a common enemy, which can only be destroyed by increasing the money supply. The media ensures mass intimidation of the people and justification of monetary policy and interference with basic human rights and freedoms, especially the right to private property. The most high-profile wars of the 21st century did not take place on the battlefield, but in social and other media and in our everyday life. The covid-19 epidemic and the climate crisis are two good examples of this kind of war. What they have in common is above all the need for state intervention and financing of the fight to eliminate the danger.

The invocation of science, which conjures up an imaginary crisis and provides reasons for the need for intervention, is quickly followed by millions and billions of taxpayers’ money generated through the destruction of currency and economic stability. In the end, however, the benefit is always reaped by the corporations and elites who are closest to the trough from which the cash flow is constantly flowing. Pharmaceutical companies had the best financial reports in history precisely in 2021, when they provided with the greatest joy and speed experimental vaccines, or more precisely laboratory concoctions, the receipt of which was effectively imposed by a coordinated political apparatus of authorities around the world.