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4 Reasons Why Fiat Money Always Results In A Crash

By: Steve Johnson

6/11/2012 - 0 Comments

Fiat money is money that is not backed by any other collateral, like gold or silver or other commodity.  After WWII the dollar was made the international currency by making all oil sales in dollars. At the time the dollar was backed by gold by the US government.

The rest of the world currencies were backed by dollars and therefore indirectly backed by gold, until 1971 when President Nixon removed the backing of gold.

Since this point in history, all major world currencies became fiat currencies.  Many individual nations have experienced a financial collapse resulting from using a fiat currency, but never before has the entire world used a fiat currency – leading to a global financial crash.

Here are 4 reasons why no nation can remain under fiat money;

  1. Fiat money is inflationary; it benefits a few at the expense of many others; it causes boom-and-bust cycles that destroy capital collection and investment needed to create new wealth.
  2. It leads to over indebtedness; bankrupting millions of families with each bust
  3. It corrupts society's morals by rewording sins like coveting and stealing other people’s money and punishing the things that build strong and stable businesses like honest and integrity.  A culture that rewards sin ends up destroying the foundation of every nation - the families – which results in a massive increase to government to try and replace the support system that only health families can give.  
  4. It depletes motivation to work hard, innovate and create as government grows it takes away the freedom and opportunity to build a successful career or business. Ultimately ends in a depression on a grand scale, stealing the life’s work of millions of people that have worked and saved.

Fiat money is evil and evil destroys everything that it touches. No nation can openly endorse evil for very long before it is completely destroyed.

Money is the means of exchange of goods, which is created by people’s labor. The state has no claim over the goods produces by the people and it is a grand mistake to give the state controls of money. 

When governments get control of the people’s money, their thirst for more is never enough.  The result is always the same. They begin to print money that does not exist in order to pay for what they do not have funds for. 

The new injected money creates inflation, thereby setting the boom-and-bust economic cycles in motion.  Each growing larger than the previous, until the system completely collapses under the weight of the debt and the inability of the people’s labor to create enough new wealth to support the large government system or pay back the previous debts. 

This is the point of no return, which is typically when a nation’s debt reaches 80% of its GDP.  Of course, this is nearly impossible to determine this because as nations approach this mark they skew their GDP and debt numbers to avoid exposing their obvious financial calamity.

In effect, fiat money is worse than counterfeiting money because counterfeit money is only a small portion of the entire base money, while fiat money is counterfeiting the entire supply of money at the source and lying about it to everyone.

Fiat money is a state run counterfeit operation that lies to the people and slowly steals everything they have.  Fiat money is a grand deception, and because the US dollar is the international currency it has become the largest deception in the history of the world.

Much of the world’s population has been fooled into believing the greatest lie ever told.

The big crash is still coming. It started by in 2008, when the real estate market crashed, which exposed banks around the world that are in more debt than they can ever pay back. Now in the fourth years, with all major nations injecting more money than imaginable, Europe is falling apart with four nations in major financial crisis.

This is the time to slap yourself in the face and say “what were we thinking?” Debt is not a good thing, even if the market is temporarily rewarding it, it is a trick. Then tell everyone else. We need the entire nation to realize they have been bamboozled into believing in debt.

Then we need to preach the truth on every corner, that we need savings, which come from forgoing consumption today in order to survive tomorrow.  We need self-induced austerity before the dollar collapses and we are forced into very drastic austerity measures.

Peter Schiff has just released his new book, “The Real Crash”, in which he discusses many of the ways we will be forced into drastic austerity measures in the coming years.

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