The Inevitable Collapse of Fiat
The concept of modern central banking, which relies on unbacked helicopter money, is like a hovering parent, never allowing its “child” to face the challenges of life.
Just like children of helicopter parents, who are unable to leave the comfort of their parents’ home, certain companies that are heavily leveraged and dependent on access to easy money, also cannot survive without it.
These companies, much like the smooth-kneed 25-year-olds, lack the drive to be financially responsible (“when paper fiat currency is free, why bother with financial discipline?”), the means to succeed in a higher interest rate environment (“our business model doesn’t work at higher interest rates”), and in some cases, even the permission to go bankrupt (“you bail us out because we employ so many voters, or because we intermediate and credit-multiply your monetary policy”).
The easy availability of fiat currency leads to continuous **political compromises**, fostering unrealistic expectations and fueling a self-sustaining cycle that only accelerates.
Even those in power, who wish to avoid printing more money, find it difficult to break away from the system.
The bottom line: **without the rigid barrier of strictly limited funds** – that is, with non-scarce money – **nothing will stop indefinite growth of government expenditure**.
Untethered to the future generational tax burden it is simultaneously exploding and expropriating.
The result: With an unlimited supply of money, government spending will continue to increase indefinitely, putting future generations at a disadvantage.
It’s no surprise that millennials feel the odds are stacked against them. They are.
— an excerpt from the Stone Ridge 2020 Shareholder Letter, its 2-minute version can be found here [https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter](https://www.2minutebitcoin.org/blog/stone-ridge-2020-shareholder-letter)
I’ll leave you to guess the solution 😉
fiat is not going anywhere anytime soon.
>The concept of modern central banking, which relies on unbacked helicopter money, is like a hovering parent, never allowing its “child” to face the challenges of life.
The concept maybe. In practice, the bulk of money creation globally is via commercial bank lending. Money is “destroyed” when loans are paid back.
The rate of lending is the largest driver of monetary expansion. Central Banks attempt to influence this behavior via monetary policy.
>Even those in power, who wish to avoid printing more money, find it difficult to break away from the system.
Commercial banks are in power? Not necessarily disagreeing…
>The bottom line: without the rigid barrier of strictly limited funds – that is, with non-scarce money – nothing will stop indefinite growth of government expenditure.
The government funds its expenditures mostly by issuing debt. That debt is further monetized by the global financial system (government debt is widely used collateral for wholesale commercial bank lending).
…but yes, there is a worrying level of debt behind the whole shebang, and people should question it.
Now try to rewrite this without insulting 25 year olds. Cause it makes me guess that you are way older than 25. Which means you were part of a fully fiat centralized life for many many years. What is going to change everything? The 25 year olds of today starting to stack themselves out of being a slave.