Dominic Frisby – Fiat Money
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[Dominic Frisby - Fiat Money]
[Dominic Frisby - Fiat Money] Source: LYBIO.net
Since 1971, when President Nixon took the United States, of what was left of the gold standard, the world has operated under a system of money called FIAT. The Dollar, the Pound, the Euro are all government FIAT currencies.
FIAT is a Latin word meaning, “let it be so”. It is the law that this government currency be money, indeed without that legal enforcement, and the fact that we must pay taxes in this money, that dollar bill or that computer digit that represents a dollar would be pretty much meaningless.
Only the government has the power to issue FIAT money, but banks can create it through lending. If somebody wants to borrow $10, a bank can create it from nowhere, and lend it. It can then charge interest. Banks also create money by lending against an asset, such as a house. They are given the deeds to the house, and they create the money out of nowhere, and lend it, at interest of course.
Over the last 40 years since this FIAT system of money became the global norm, the supply of money has grown exponentially, in fact we’ve seen the greatest growth in the supply of money in history, but who benefits. Of course those that have the power to issue money, governments and banks. They haven’t had to do anything productive. They just create money. Then those companies and individuals that get this money early. They can spend it before the prices of the things they want to buy have risen to reflect the new money in circulation. In other words they get services, products, assets cheap. But prices soon rise, so holders of assets such as shares or houses will then see gains without there necessarily being any improvements to the company or house in question. Often this can lead to speculative bubbles.
Who gets this money early? However money is created be it through lending, fractional reserve banking, financial bailouts or old fashioned money printing. Banks are always at or near the top of the money issuing pyramid.
Next come corporations who borrow large sums. Those own lucrative government contracts for new ventures, particularly overseas, banks associate companies and partners. Those that borrow early and at low rates, and the banks senior employees. They all quickly get their share of the pie. In some cases this will come in the form of bonuses.
[Dominic Frisby] Source: LYBIO.net
But what about those at the bottom of the pyramid, those on fixed wages or incomes, those who live in remote areas or those with savings. By the time this newly created money has filtered down to them, the prices of the things they want to buy have increased, their savings buy them less however, and their wages remain largely unchanged. In some cases they have to take on debt, just to be able to afford the things they were previously able to buy, which means they have to go back to the banks.
In reality this process of creating money only redistributes wealth from the bottom to the top of the pyramid, and thus that ever increasing gulf between rich and poor gets bigger and bigger, and bigger.
Written And Narrated By Dominic Frisby
Animated By Pola Gruszka
Produced By Renegade Economist
Dominic Frisby – Fiat Money. Creating money only redistributes wealth from the bottom to the top of the pyramid, and thus that ever increasing gulf between rich and poor gets bigger and bigger, and bigger. Complete Full Transcript, Dialogue, Remarks, Saying, Quotes, Words And Text.
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