Anon Archived What is the most laymans man way of explaining FIAT? (Monetary system, not the cars) (whatever)
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Archived on: 3/16/2020 10:00:00 AM
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Anon Archived What is the most laymans man way of explaining FIAT? (Monetary system, not the cars) (whatever)
submitted ago by 3565146?
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[–] HuginnOgMuninn ago
describe it to me, I'll tell you where I get lost.
[–] 21748803? [S] ago
FIAT money is our monetary system. It has no real physical backing (gold, etc) and is instead IOU's (Federal Reserve Notes) which are also IOU's in place of the physical gold.
In short, our banking system is like a game of Monopoly - when the Bank runs out of bills, it just cuts up pieces of paper with the value of the new bills and the game continues. Except in real life, when that happens, the value of all bills decreases proportionately, which makes all goods cost more dollars.
[–] HuginnOgMuninn ago
That's not enough.
You just explained inflation to me. You explained how within a gold backed currency, inflation can't happen, but it can happen within FIAT money. But inflation can happen in a goldback.
You have not even touched on the most important thing:
https://en.wikipedia.org/wiki/Fiat_money#Money_creation_and_regulation
Nota bene; I don't give a fuck about how you feel about my interpretation, take responsibility of it and fix it if you wish to improve your communication.