The Achilles Heel Of The Fiat Money System
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
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excerpt
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Fiat money fosters what I have previously described as “collective corruption,” wherein many people become proverbially ensnared by the structures that fiat money establishes, fostering dependency and entrenching its influence. Consider this: fiat money acts as a catalyst for the expansion of the state, making it bigger and more powerful. Companies receive new orders from the state, prompting adjustments in production and employment to meet artificial demand.
Or consider: people keep their life savings in fiat money. They invest, directly or indirectly, in government bonds and bank debentures and maintain time and savings deposits.
Gradually, people become profoundly reliant on the perpetuation of the fiat money system, consenting to nearly any measure proposed by the state (and the special interest groups taking advantage of it) to keep the fiat money system going.
….. Is this delicate balancing act sustainable? Recent decades seem to suggest so. Despite numerous crises and the chronic erosion of purchasing power, the demand for money in many economies have remained relatively stable. However, can the balancing act succeed in the long-term? Probably not. The primary concern is the enormous accumulation of debt within the fiat money system, eventually reaching a tipping point of unsustainability.
At that juncture, people will be confronted with the question:
Should the fiat money system collapse under the weight of deflationary pressures, or should the outstanding debt be financed by creating new money? Unfortunately, history suggests that in a time of “existential crises,” people consider expanding the money supply as the lesser of two evils.
Once initiated, a deliberate inflation policy becomes incredibly challenging to contain, let alone reverse. It has the propensity to spiral out of control, potentially culminating in high inflation or even hyperinflation, thereby precipitating a collapse in the demand for money and eroding the very foundations of the fiat money system.
However, in such a dire scenario, one must reckon with the state’s determination to avert the demise of its fiat money regime at all costs. The state (as we know it today) can be expected to exhaust all available measures to safeguard the continuity of its monetary system.