Fiat Currency: Why The U.S. Dollar is Doomed to Fail

Hey ATS, I came across a video on youtube called End the Paper Ponzi and and it talked about the worth of silver and why it is a good idea to invest in gold and silver.

During the video fiat currency was mentioned and the author of the video said that there was no fiat currency that did not fail. So fiat currency as of our current history has a 100% failure rate.

In fact the average lifespan of a fiat currency is 40 years and no fiat currency has outlived the human lifespan.

The U.S. has been using fiat currency since the 1930's so you do the math. Our National debt has risen to 13 trillion dollars and is predicted to overtake our GDP...

There can only be one outcome with debt as out of control as the U.S. and it is predicted to be over 18 trillion dollars in just 9 years.

Here is some information from an article that lays a lot of the facts about this situation on the table. I am only posting part of the article because it is pretty long but if you want examples of failed fiat currencies from history follow the link for the info.

dailyreckoning.com...

Fiat Money -Toilet Paper Money

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. But I will get into that in a moment. In the meantime, I will show you that fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild.

Fiat Money -More Recent Times

In recent times, fiat failures have become more common occurrences. For the sake of time, I won’t go into extensive details of all these examples of paper money failures, because there are SO many. But here you have it:

In 1932, Argentina had the eighth largest economy in the world before its currency collapsed. In 1992, Finland, Italy, and Norway had currency shocks that spread through Europe.

In 1994, Mexico went through the infamous “Tequila Hangover,” which sent the peso tumbling and spread economic hardships throughout Latin America. In 1997, the Thai baht fell through the floor and the effects spread to Malaysia, the Philippines, Indonesia, Hong Kong, and South Korea.

The Russian ruble was not the currency you wanted your investments denominated in in 1998, after its devaluation brought on economic recession.

In the early 21st century, we have seen the Turkish lira experience strokes of hyperinflation similar to that of the mark of Weimar Germany.

In present times, we have Zimbabwe, which was once considered the breadbasket of Africa and was one of the wealthiest countries on the continent. Now Mugabe’s attempts at price controls, combined with hyperinflation, have the nation unable to supply the most basic essentials such as bread and clean water.

Fiat Money -Lessons to Be Learned Here in the U.S., I should say the lessons were not learned. There are many consistencies from the above-mentioned stories that led up to the eventual collapse of the currencies.

The scary thing is that the U.S. has some of these above-mentioned characteristics, the ones that lead to toilet paper money becoming just that. More on that in just a second.

I would first like to give a brief look at the U.S. attempts with paper money in our short history. The first attempt with paper money came in 1690 with the issuance of Colonial notes. The first Colonial notes were issued in Massachusetts and were redeemable for gold, silver, corn, cattle and other commodities.
The other Colonies quickly jumped on the toilet paper money bandwagon and began issuing their own paper currencies. Like a broken record, the money quickly became overissued.

The lessons of John Law and others were definitely not learned. It is not good enough just to say that a currency is backed by commodities. It actually HAS to be backed by commodities. Essentially, it was still a fiat money, and in a short period of time, Colonials became as good as toilet paper.

The next experiment came during the Revolutionary War. Big surprise — the issuance of paper money was used to finance the war efforts. This time, the currency was called a continental. The crash of the continental was spectacular, and the phrase “not worth a continental” was coined.

This brought on a large distrust for paper currency, and until 1913, toilet paper money in the U.S. wasn’t used. Enter the infamous Federal Reserve and its monopoly on money and interest rates. Now we have the greenback.

Although the money was “officially” backed by a gold standard until 1971, it wasn’t a true gold standard. When the government found it inconvenient to have a gold standard, it just made it illegal for U.S. citizens to hold gold or exchange dollars for gold.

As reported on Strike-the-root.com: “Under the infallible leadership of President Franklin Roosevelt, it was made illegal to own gold. On March 11, 1933, he issued an order forbidding banks to make gold payments.

On April 5, Roosevelt ordered all citizens to surrender their gold — no person could hold more than $100 in gold coins, except for collector’s coins. He also made it unlawful to export gold for payment abroad, unless done through the Treasury.

The penalty for defying Roosevelt was 10 years in prison and a $250,000 fine.” But the official demise of the dollar was locked into place in 1971 when “Tricky Dick” Nixon completely severed all ties between the dollar and the gold standard. During the decade that followed, the U.S. experienced some of the worst inflation in its history, only matched by today’s U.S. monetary and fiscal irresponsibility.

The U.S. of A. has all the characteristics set in place that have led to the collapse of every other fiat currency money in history.

[edit on 9-6-2010 by TV_Nation]

Yep every fiat currency in history has failed and failed miserably causing all sorts of havoc. While we started on this course in the 1930s we did not go off the gold standard completely until 1971 or 72. So we are right at the end of the 40 year cycle.

It is mathematically built in there is no saving it you can only inflate a currency so much before it flies apart just like a balloon. We have been in the upper ten percent for the last decade and they have been trying to control it with little deflations called recessions but that only works so long since there needs to a continual rise in prices for the banksters to make profits.

Its going down and soon and they know it their solution will be a new currency and you will be lucky to get ten cents on the dollar and the banksters will have taken the bulk of our wealth just like in the 30's but worse this time! Also this will be a reboot since the reason you only get ten cents on the dollar is automatic deflation so they can start the scheme all over again. The sad part is most people will buy into it because of thier desperation from the depression now unfolding.

[edit on 9-6-2010 by hawkiye]

Ah, yes. Fiat currency. That has been discussed a lot here.

But can we eliminate currency altogether? I say YES!

My thread here discusses a book I wrote, offered free on ATS media, which shows how. It is here:

www.abovetopsecret.com...

reply to post by Amaterasu


Thanks for the heads up on your book. I won't have time to read it tonight because I'm gonna be out the door shortly but I will give it a read when I get a chance.

A society free of currency seems hard to believe or even fathom but maybe the info in your book can change my perception. It would really take major changes to make it a reality but I would welcome it if it was done the right way.

The big boys have been playing at this game for a long time, and yes, we are on the verge of a major reset--a controlled demolition so to speak. The problem is that the world, especially the economic world, is vastly more complex today than it was in the 1930s, or 1970s, or heck, even in the 1990s.

Complexity brings a lot of uncertainty with it, and I suspect that their "controlled demolition" will get out of hand, like a runaway nuclear reaction, leading to a global economic holocaust of unprecedented proportions. In the process, those who have been "cooking the books" (i.e., the central bankers) are very likely to get burned beyond recognition--leading to a true reset, and the elimination of our corrupt central banking system, and a new clean slate for all mankind.

A fiat currency is actually good, but only a few countries can have it, such as the United States.

The problem is that our fiat currency sucks. The Fed Note is debt based and more notes must be printed in order for the economy to work or else there will be currency destruction and depression from the repayment of said debt based currency.

However there is a solution, and it has been done before and proposed to compete with the Fed.

There is the U.S. note.

United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. The Treasury Department issued these notes directly into circulation, and they are obligations of the United States Government. The issuance of United States Notes is subject to limitations established by Congress.

www.ustreas.gov...

Instead of debt based currency issued by the Fed (private banks) who can care less about the population, the U.S. note is issued by the Treasury itself. It worked very well in the Civil War and the Lincoln Greenback is considered as one of the very best currencies ever.

The U.S. note is fiat and is backed by the power and natural wealth of the country. This gives it flexibility that gold and metal backed currency does not have. Besides the elites are taking all the gold and silver.

The U.S. note is issued directly by the government. If the economy is running low on liquidity, the government better start injecting more cash or they get voted out. Try voting out the Fed. This type of currency would also make government funded projects a desired asset instead of a liability. Imagine a functional space program, advanced military, war on poverty, and infrastructure improvements all possible because that would be some of the prime ways the currency could be issued to the public.

The U.S. note can be controlled. If there is a risk of inflation, the government can tax it out of the system and destroy it.

The U.S. note has all the benefits plus more in comparison to the Fed note and without the ball and chain trillions of dollars of debt owed by our children to the banking elite.

It would be easy (and constitutional) for our country to start using a currency directly issued by the government. Too bad the two main historical proponents for such a currency, Lincoln and JFK, also happened to have their brains blown out.

reply to post by wutone


No fiat currency is not actually good it has ended badly every time in history. Centrally controlled currency and paper currency with no backing is always bad and will always cause problems and end badly. It is mathematical certainty.

Value for value and a free market on currency is the only way to go!

[edit on 9-6-2010 by hawkiye]

reply to post by hawkiye


If fiat currency has no backing, why are we using it?

How did you pay for that computer you are using, or the food you eat? Barter? Gold?

How will you pay your taxes, tell the government you will wash dishes?

Fiat currency has a backing, so long as the guys with the big guns says it does.

The U.S. note would not be centrally controlled in that one guy says how much will circulate. It would be politically controlled. If the politicians failed at controlling it the politician goes bye bye. The reason why the U.S. note is so good is that it has the flexibility of a fiat note in that the guys with the big guns say its valuable and the guys with the big guns can't really be that big without a naturally prosperous and free nation. Unlike the Fed note, it isn't controlled by some banking cartel and is more responsive.

Besides, if fiat currency is so historically bad, where are all the nations with other types of currency? Surely there has to be some wise non-NWO nation out there outsmarting the system, right?

The colonies had a fiat currency prior to the Revolution, called Colonial Script. It worked marvelously until the Brits outlawed it after Benjamin Franklin bragged about its success to the head of the Bank of England.

Lincoln's Greenbacks were what enabled the Union to win the Civil War. He felt that it was the greatest thing since sliced bread (which wasnt actually invented till later.) In this regard, he said:

"The government should create, issue and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers..... The privilege of creating and issuing money is not only the supreme prerogative of Government, but it is the Government's greatest creative opportunity. By the adoption of these principles, the long-felt want for a uniform medium will be satisfied. The taxpayers will be saved immense sums of interest, discounts and exchanges. The financing of all public enterprises, the maintenance of stable government and ordered progress, and the conduct of the Treasury will become matters of practical administration. The people can and will be furnished with a currency as safe as their own government. Money will cease to be the master and become the servant of humanity. Democracy will rise superior to the money power."

The British bankers hated Lincoln's greenback policy, and had him killed for it. Its possible that JFK was killed because of his silver certificates, which were along the same line.

In spite of these successes, the problem with a pure fiat currency is that it always leaves room for abuse, by unscrupulous men in positions of power.

The problem with a hard-backed currency, such as one backed by gold or silver, is that it limits the growth of capital in an expanding economy.

Not exactly sure what the solution is. This subject has been discussed to death by economists for generations, and there are many different camps. But clearly the system we currently have, where the creation of fiat currency and credit is in the hands of private institutions is the worst of all possibilities, and needs to be abolished. The current Money Power has completely usurped all forms of democracy and representative government, and we are slowly being transformed into indetured slaves.

I am only 20 years old, but even I remember when a dollar bought a lot more than it does today.