fiat currency

Remember the Federal Reserve’s “2% Inflation Target”? It has been 63 consecutive months since that target has been met. In May, the official Consumer Price Index (which has been continually modified since the 1980s to make it look better) was 4.2% higher than a year earlier. But even if the Federal Reserve was able (har!) to meet this target, it smells suspiciously like a plan to gradually devalue the currency over time. This makes political sense — a cheaper currency benefits debtors, at least for as long as interest rates don’t reflect expectations of continual currency debasement. Since the government is the biggest debtor, and since a lot of voters are also big debtors, there is a kind of constant Read More ›

In 2019, I was involved in a crypto project that aimed to provide a usable basis of large-scale commerce in an environment where existing fiat currencies were failing badly. Of course, I was in support of a 100% gold system — which has always worked in the past. And, people agreed that this was a good idea “theoretically,” and “eventually.” But, the perception at the time was that there should be some kind of intermediate step. For example, if a country had a regular gold-based currency today, then the value of the currency would be fixed to gold. In other words, foreign exchange rates with the other major fiat currencies would be terribly volatile, and also, would introduce a lot Read More ›