The FIAT Currency is Nothing But An Experiment.

As we have established from the previous parts of the series- ‘Money As An Agenda’, the US took World Power from the Second World War.

While the war was still being fought, there was a world leaders conference that held in the US which gave birth to the Bretton Wood’s Monetary System of Management. This system agreed for other world currencies to be converted into US dollars, making it the world currency for international trade and the US dollar convertible to Gold at 0.88867 grams per dollar for foreign governments. This was deliberated on for about twenty-two days and later agreed on the last day of the conference.

However, less than thirty years later the US decided to go off the gold standard and established a new treaty of rules called the ‘Smithsonian Agreement ‘ whereby other countries’ currency was pegged to the US Fiat dollar(paper money).

Something striking isn't it? You didn't think one man thought about something so hard, and one day woke up and decided to go off the gold standard did you? There was no war in this case, like in the other times where a lot of monies was needed for damages, so countries would do some repairs before reinstating the gold standard again after recouping from the war. The question now would be, what do you think happened behind closed doors that you and I weren't informed about before decisions were made? It wasn’t known whether the Powers-that-be informed the whole world before the announcement was made by President Nixon in 1971, so why should you be included in the conversation? Excellent question if that was your thought process.

All this seems just too familiar I tell you. From History, I'd like to show you a country that first initiated the use of Fiat currency (money backed by nothing ) and we’ll analyze exactly what happened over the years compared to what's happening right now;

Were they successful in it? For how long was it used? And more importantly, what lessons can we learn from them? Is the US carrying out this same Fiat experiment today before our very eyes? How long has it been already?

Some of us are aware of the extreme inflation in the 1920s the Fiat currency experienced in the German Weimar Republic, as well as the eighteenth-century collapse of France's Fiat currency under John Law only to mention a few. Inflation all around the world is at an all-time high already and it's just been fifty-two years from when the world went off the gold standard. China, in particular, used paper money (Fiat) for about 300 years in history and it failed repeatedly. Perhaps that's exactly the same experiment the US is carrying out to see how well it plays out for a similar timeframe too but perhaps learning from the mistakes of China? Let's talk about China’s moments in history before we come back to the present-day US and see how well this experiment has been fairing.

China And The First Experiment On Fiat.

The S'ung dynasty was the first to issue true paper money in 1023, and it did so at first cautiously, issuing small amounts, used in a limited area, and good for a specific time period. The notes would be redeemed after three year's service, to be replaced by new notes for a 3% service charge, a neat way for the government to make money.

The abuses started immediately ofcourse. Though the notes were valued at a certain exchange rate for gold, silver, or silk, convertibility was never allowed in practice. Then later, the notes were not retired as they printed many more of them. The government made several attempts to support the paper by demanding taxes partly in currency and making other laws, but the damage had been done, and the notes fell out of favour.

By 1106, inflation was becoming evident as the dynasty was fighting an ongoing battle against the Mongols, which they eventually lost by 1217. In the interim, many different paper schemes were adopted taking advantage of the government monopoly on tea and salt. All of these schemes were defeated by the lack of commitment to the currency, and the increasing costs of the war.

The most successful period of paper money history in China was during the early Yuan dynasty. They greatly expanded the use of paper currency, both by issuing notes of indeterminate duration, and allowing full convertibility to silver and gold or "strings" of bronze coins. Astonishingly, they also allowed conversion of S'ung notes to their own at very fair exchange rates, greatly smoothening the succession process.

Another clever thing they did was to forbid the use of gold and silver as currency, but allow a certain amount of currency to be exchanged each year for precious metals to be used for jewellry and ornamentation purposes. They, too, also supported the currency by demanding that a certain percentage of taxes be paid in it (as opposed to commodities). Yuan currency was freely exchangable across the whole country, and a certain period of price stability was enjoyed.

As usual,it didn't last. Eventually, the needs of fighting another war (which they in turn lost) against a nationalist minded opponent led to slow and then rampant inflation. Paper money disappeared again. The Mings revived paper currency on limited scales, but never supported it in any meaningful way. It appeared and disappeared under numerous Byzantine legal strictures and currency "reforms", finally disappearing altogether for good with the ascendancy of the conservative Manchu dynasty in the early 1500s.

So from what we gather here, some factors like:

Improper management of the monetary system affected the fiat currency of China in the early days.

War was another disturbing factor that could barely be avoided.

Increasing Supply with demand being the same was another deadly factor.

These are just factors contributing to the demise of the fiat currency. What lessons can you see from this practice? It’s simple. Fiat currency is doomed for destruction without precious metals backing it up. Even when you have precious metals backing it up, you have to be extremely over-cautious for things not to spiral out of place which in turn, is just a matter of time as one mishap and that's it. In today’s world, you’d agree with me totally that the Spiraling already occurred. Now the nexus event would definitely be when the world went off the gold standard of course.

Hence, the paper money we use today is headed in only one direction- destruction. Just like a ticking time bomb, the minutes tick away, tick - tock.

However, the question still remains, what was the plan for what happened in 1971? I guess we can never know these secrets until insider information is leaked.

The idea that paper money is just an experiment (to see if we can outdo the early Chinese Fiat system that repeatedly failed) is built on the fact that, perhaps the decision that was made in 1971, was a long pre-planned one to gain ascendancy to World Power Status, by using the Bretton Woods System of Monetary Management to lure the nations into a deal that saw the US dollars gain Value in the international market or I could simply be thinking too wild here.

In any case, we’ve come to the end of volume one of our money series ‘Money As An Agenda’.

Next?

In the volume two of our Money Series, we’ll talk about -

‘Money As Freedom Vol2.’

Some of the topics under this would include:

The Banking System (an exposé)
Inflation (like you’ve never heard )
Bitcoin and the Internet etc…

Kindly let me know if you've been following the series so far, and if you care to share a few things you've learned. I'll be having a video format of the series from next year as well, you'd want to follow for sure. As always my name is Clever Abaribote, and I'm your favorite crypto journalist.

Writer and Editor: Clever Abaribote

Sources: Wikipedia, Financial Sense University, Dave Ramsden.