The fiat standard has led to financial instability from "summary" of The Fiat Standard by Saifedean Ammous
The fiat standard has created a system where governments and central banks have the power to manipulate the money supply at will. This ability to print money out of thin air has led to a situation where currencies are constantly losing value, eroding the purchasing power of savers and workers. This erosion of wealth through inflation is a hidden tax that disproportionately affects the poor and middle class, as the wealthy have access to assets that can protect them from the devaluation of currency. Furthermore, the fiat standard has incentivized reckless spending and borrowing by governments, as they can simply print more money to cover their debts. This has led to unsustainable levels of public debt in many countries, which could eventually result in a sovereign debt crisis that would destabilize the global financial system. The lack of any real constraints on the money supply under the fiat standard has also fueled speculative bubbles in asset markets, as investors chase higher returns in a low interest rate environment. These bubbles can eventually burst, leading to financial crises that can have devastating effects on the economy. In addition, the fiat standard has eroded the discipline that a gold standard imposes on governments and central banks. Under a gold standard, the money supply is limited by the supply of gold, preventing governments from engaging in reckless spending and inflationary policies. Without this discipline, governments and central banks are free to pursue short-term goals at the expense of long-term stability.- The fiat standard has created a system that is inherently unstable and unsustainable. By allowing governments and central banks to manipulate the money supply at will, it has led to financial instability that threatens the prosperity and well-being of people around the world.
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