• Fiat money has given governments the ability to become more authoritarian, leading to a welfare/warfare state, surveillance state, police state and militaristic tyrannies.
• Central banking is attractive to governments because it obscures the ability to print money and run deficits on budgets without having to raise taxes or tighten spending.
• This has allowed governments to become increasingly powerful with the potential for great destruction in the past 100 years.
The Power of Fiat Money
Fiat money gives governments an unprecedented power over their citizens. It allows them to implement welfare/warfare states, surveillance states, police states and militaristic regimes that can have detrimental effects on individual freedoms. The main beneficiary of this obscured ability is the government itself which can run deficits on its budget without having to raise taxes or tighten spending. This has enabled them to become increasingly powerful with potentially devastating consequences in the last 100 years.
Central banking is attractive to governments because it obscures the printing of money and running of deficits on budgets without having to face the unpopularity of raising taxes or cutting spending. Free market interest rates usually hover around 5.6% or higher depending on circumstances, making taking on debt under sound money an expensive proposition that often requires budget tightening or tax increases – something most people are not keen on doing. Under fiat currency however, these trade-offs no longer exist allowing governments greater control over their finances and larger budgets than ever before.
The Rotten Fruits of Fiat Money
The power of fiat money has led not just to increased government control but also encouraged ideologies such as Marxism and positivist law as well as authoritarian visions that have had detrimental consequences for society at large. The ability for governments to take advantage of this monetary system with little consequence means that they have been able to increase their power with potentially destructive results in recent history.
The Individual Level Incentives
At an individual level, fiat currency has incentivized people towards higher time preferences through ubiquitous debt and lack of savings vehicles leaving many unable make long-term plans for their future financial stability due rising costs associated with borrowing funds from banks or other lenders. This has made personal life much more dependent upon short term decisions which are often not beneficial in terms of long-term security or prosperity for individuals at large.
Company Level Incentives
At a company level, fiat currency has enabled unnaturally large companies replace our families by providing them accesses capital markets in ways previous generations would never have imagined possible leading zombie-like businesses that rely heavily upon debt financing rather than organic growth through customer acquisition and retention strategies employed by smaller family owned operations resulting in fewer jobs created while increasing economic inequality among different groups within society .