Reply to post: Success of fiat

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MonkeyCee Silver badge

Success of fiat

"Which is why they've been so successful throughout history."


Look, fiat is a very useful tool, but describing them as successful throughout history indicates a profound lack of knowledge of the subject. If your currency is the default world currency (by hook or crook) then you enjoy massive benefits, as you've got a magic checkbook.

For a start, almost every losing side in a war issued fiat directly or as bonds, and then defaulted on them when they lost. Article 14 of the US constitution I believe wiped all the debts issued by the Southern states during the civil war.

Many changes of power (French revolution, Russian revolution, Denmark in 1850) resulted in all existing sovereign debts being discharged.

In more recent times, Greece and Argentina have defaulted on their debt repayments, forcing people to take a loss. Even when issued in euros, there's no explicit guarantee of the German's to cover Greek debts.

"Fiat currencies are backed by governents and the whole economy that uses them."

And can also be fucked by other governments. Venezuela and Zimbabwe as recent examples. Both *had* an economy and have/had a sovereign fiat currency. Yet those currencies are not so successful, leading to printing and inflation that impoverished everyone who held their wealth in those currencies.

One of my crypto mining buddies is from there. You can mock BTC and ETH as being "impractical" but he's been feeding his extended family from the proceeds of his GPUs for several years now. Because the local fiat is worthless, and foreign exchange is heavily controlled by the government, having any access to USD makes you (relativly) very wealthy. Although in this case it's the difference between starvation and mild malnutrition.

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