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All Fiat Money Collapses

October 6, 2011

Does all fiat money collapse?  The  answer is yes. There has never been a paper currency in history that has stood the test of time. They all eventually die.

Like the dollar, today's Euro, the Japanese yen, the  Swiss Franc, and the British pound are all fiat currencies.  Here's what's crazy though:  Every fiat currency that existed before these current ones was eventually destroyed by its government.

Why?

Two reasons primarily:  leverage and promises.

1) In a fiat money system, banks always find ways to expand credit and leverage to unsustainable levels.  Currently the banks are doing this via fractional reserve lending and derivatives.  When these leverage-induced bubbles pop, banks either default on their obligations, or the government bails them out.  Since the banks are politically powerful, they can almost always make the government tax people, issue bonds (go in to debt), or simply print the cash to get their bailout.

2) In a fiat money system, governments always promise more than they can deliver. To make up the difference, the government  can issue bonds (go in to debt), or print the cash and give it to the people or, as we've seen lately,  to their cronies.   Additionally, no politician wants "the big collapse" on their watch.  They will do anything to stay in power and keep the bubbles going.  Fiat money is their main weapon to do this.  Politicians take the easy way out. They print. They print to bail out their buddies and promise what they can't deliver to the voting public.

Quantitative Easing, the program now employed by central banks around the world, is simply a euphemism for printing more money.  The more money that's printed, the less valuable it is.  That's why all fiat money collapses.  It eventually becomes worthless.

So now you know the simple truth about money and how all fiat money collapses.

Yes, there are ebbs and flows.  The dollar,  for example, is rallying recently on weakness in the Euro, but the trend for all fiat money marches inexorably to worthlessness.  All fiat money collapses.

What can you do about it?

Not a whole hell of a lot.  Powerful people want this system.  Those that control the money system are the most powerful people in the world. They use it to wage war, propagandize, and plot the future of the world. The world is a chess board to them. We are pawns.

But how can you benefit from this knowledge?

Take steps to protect yourself from a corrupt money system. Buy a bit of gold if you can afford some. Buy a bit of silver.  Trade in paper money for real things: tools, food storage, firearms, a farm, a business, a bicycle, etc.

Why? All fiat money collapses eventually. You can bank on that.

Hope that helps!