Fiat Money is Not a Great Thing to Have

I've known for quite some time, now, that the US Dollar (USD) hasn't been 'backed' by gold for years. Consequently, the USD is rather worthless. It has been changed to fiat money or fiat currency. There was a time when the USD was based on gold, a physical commodity, which meant the USD was commodity money.  It's been stated that many of the world's woes can be attributed to the global fiat currency system.

As Wikipedia details, "Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.

Fiat money originated in 11th century China, and its use became widespread during the Yuan and Ming dynasties. Today, all national currencies are fiat currencies, including the US Dollar, the Euro, and all other reserve currencies. This trend began with the Nixon Shock of 1971, which ended the backing by precious metal of the US Dollar.

The term fiat money has been defined variously as:

• any money declared by a government to be legal tender.
• state-issued money which is neither legally convertible to any other thing, nor fixed in value in terms of any objective standard.
• money without intrinsic value.

While specie-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of specie, fiat money's value is unrelated to the value of any physical quantity. Even a coin containing valuable metal may be considered fiat currency if its face value is higher than its market value as metal.

A feature of all fiat money is its acceptability to the government for payment of taxes and charges.

Fiat money is not essential for large countries, nor is it always used. An economy may function on banknotes issued by commercial banks, which are not legal tender, and hence not fiat money. In the United Kingdom, for example, seven retail banks issue banknotes. This was also the situation in the United States during periods prior to 1862, before the first United States Notes were created and declared by the government to be legal tender.

Historically, money originated as commodity money, based on physical commodities such as cowrie shells, copper, gold, or silver, but fiat money is based solely on faith in the government issuing the money." 

If you'd like to learn more, visit 'Fiat money' to read more of the Wikipedia article.  Also, visit the WealthCycles Library - Fiat, for a list of articles like 'The Dawn of Money and The Seeds of Modern Fiat Destruction' and 'The Deadly Effect of Fiat Currency'.  Listen to 'Fiat: Designed to Fail', as well.

With our goal of achieving blessed affluence (independently wealthy) being knowledgeable about money is crucial to becoming and remaining independently wealthy in a blessed way.  Let's be knowledgeable about this great tool called 'money' and then apply it to our daily lives.  Otherwise, we will remain miserably in lesser states of existence than our Creator planned and established for us to have and enjoy!




"The heart of the man of good sense gets knowledge; the ear of the wise is searching for knowledge." Proverbs 18:15, Bible in Basic English


Note: The term 'man' used here in Proverbs 18:15 refers to 'hu-man' or 'human' and includes females as well as males.

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