Since officially abandoning the gold standard in 1973, the dollar is what economists call fiat money. The word “fiat” comes from Latin and is often translated as a decree, but in summary, the term means that the money is not backed by a physical asset, like gold or silver. Its value is based only on the full faith and credit of the United States. This makes it much easier to increase the debt and resort to expansionary policies. Critics consider this damaging and see an economic crisis looming and inevitable. Defenders believe the economic damage would be bigger if nothing was done. In this video, we dive into the advantages and disadvantages of the system.
If you are interested in this video, you might also like to watch about the gold standard, gold logistics and cryptocurrencies. Here:
https://www.youtube.com/playlist?list=PLaevADMuI9-GLC71kHSv_46tQGncKQ2CT
Sources:
1: https://www.investopedia.com/terms/f/fiatmoney.asp
2: https://www.investopedia.com/terms/f/fiatmoney.asp
3: https://www.nytimes.com/2020/04/15/business/coronavirus-stimulus-money.html
4: https://www.investopedia.com/terms/d/debtsecurity.asp
https://www.investopedia.com/terms/g/government-bond.asp
5:https://www.investopedia.com/articles/economics/10/understanding-the-fed-balance-sheet.asp#:~:text=Liabilities%20for%20the%20Fed%20include,called%20quantitative%20easing%20(QE).
6: https://www.nytimes.com/2020/04/15/business/coronavirus-stimulus-money.html
7:https://www.investopedia.com/articles/economics/10/understanding-the-fed-balance-sheet.asp
8: https://www.investopedia.com/articles/economics/10/understanding-the-fed-balance-sheet.asp#:~:text=Liabilities%20for%20the%20Fed%20include,called%20quantitative%20easing%20(QE).
9: https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
10: https://www.forbes.com/sites/nathanlewis/2020/03/27/what-if-we-had-a-gold-standard-right-now/?sh=307d697f3e58
11: https://www.nytimes.com/2014/07/07/opinion/paul-krugman-conservative-delusions-about-inflation.html?searchResultPosition=9
12: https://www.nytimes.com/2021/01/27/opinion/stimulus-pandemic-rescue.html?searchResultPosition=1
13: https://www.nytimes.com/2014/07/07/opinion/paul-krugman-conservative-delusions-about-inflation.html?searchResultPosition=9
14: CBO: U.S. federal debt to exceed size of economy before Biden stimulus is approved – The Washington Post
Debt (Page 3): https://www.cbo.gov/system/files/2021-02/56970-Outlook.pdf
15: https://www.nytimes.com/2021/01/27/opinion/stimulus-pandemic-rescue.html?searchResultPosition=1
16: https://fred.stlouisfed.org/series/NGDPPOT
17: https://www.nytimes.com/2021/01/27/opinion/stimulus-pandemic-rescue.html?searchResultPosition=1
Extra Sources:
https://www.newyorkfed.org/markets/primarydealers.html
https://www.visualcapitalist.com/currency-and-the-collapse-of-the-roman-empire/#:~:text=Hyperinflation%2C%20soaring%20taxes%2C%20and%20worthless,any%20meaningful%20medium%20of%20exchange.
Famous Myths of “Fiat Money”
https://appropriate-economics.org/materials/famous_myths_of_fiat_money.pdf
https://www.economist.com/free-exchange/2017/09/22/bitcoin-is-fiat-money-too
https://www.economist.com/finance-and-economics/2004/02/26/heading-for-a-fall-by-fiat
https://www.economist.com/finance-and-economics/2009/08/13/law-of-easy-money
https://krugman.blogs.nytimes.com/2015/02/10/theres-something-about-money-implicitly-wonkish/?searchResultPosition=1
https://takingnote.blogs.nytimes.com/2013/04/11/the-price-of-gold-and-ron-paul/?searchResultPosition=3
https://www.nytimes.com/2011/02/10/business/economy/10fed.html?_r=0
https://www.nytimes.com/2013/06/23/business/the-federal-reserves-framers-would-be-shocked.html?searchResultPosition=28
https://www.businessinsider.com/deutsche-bank-end-of-fiat-money-2017-11?r=DE&IR=T
https://www.bloomberg.com/opinion/articles/2021-01-25/the-dollar-s-crash-is-only-just-beginning?utm_campaign=instagram-bio-link&utm_medium=social&sref=2o0rZsF1&utm_source=instagram&utm_content=business
https://www.cbo.gov/system/files/2020-03/56165-CBO-debt-primer.pdf
https://www.crfb.org/blogs/feds-effect-deficits-and-debt
http://www.crfb.org/blogs/fed-buying-our-new-debt#:~:text=The%20remaining%20debt%20(13%20percent,its%20ownership%20of%20U.S.%20debt.
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