Fiat money is inherently flawed from "summary" of The Fiat Standard by Saifedean Ammous
The fundamental flaw of fiat money lies in its lack of scarcity. When a money supply can be expanded at will by a central authority, its value is inevitably eroded over time. This is in stark contrast to the properties of sound money, such as gold, which has a limited supply that cannot be manipulated by any single entity. The ability to create money out of thin air may seem like a convenient tool for policymakers to stimulate economic growth or fund government spending. However, this power comes at a cost. By increasing the money supply, central banks effectively dilute the purchasing power of existing currency units, leading to inflation. This hidden tax on savers and wage earners is a pernicious form of wealth redistribution that disproportionately affects those least able to protect themselves. Moreover, the arbitrary nature of fiat money issuance introduces uncertainty into the economy. Market participants are left guessing as to when the next round of money printing will occur, creating distortions in prices and undermining the efficient allocation of resources. This unpredictability can lead to boom-and-bust cycles, as artificial credit expansion fuels unsustainable investment bubbles that inevitably burst. The reliance on fiat money also erodes trust in the financial system. When the value of money is subject to the whims of central bankers, savers are incentivized to seek alternative stores of value, such as cryptocurrencies or precious metals. This flight from fiat further destabilizes the economy, as capital flows out of traditional channels and into unregulated assets.- The inherent flaws of fiat money are a ticking time bomb waiting to explode. Without a fixed supply and decentralized issuance mechanism, fiat currencies are doomed to lose their value over time. It is only a matter of when, not if, the illusion of paper money will be shattered, revealing the harsh reality of monetary manipulation.
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