The Problem Behind Government Money
“You can actually blame everything on fiat.” — Saifedean Ammous
The central banks and government have the power to manipulate and control the supply of money in their country. This happens to all fiat currencies.
The money that is easy to produce makes society poorer in the longer term, causing savings rates to continue to go down. When we save, our money continues to decrease its purchasing power because of inflation.
As a result, government money is not a good store of value. In the case of Lebanon, hyperinflation happed because of economic crisis.
Many poor countries have been experiencing this and it is somehow very alarming to see it.
Strong currencies in the world are mostly stable but it would be detrimental as their monetary value decreases over the long term.
Definition of terms:
Fiat: inconvertible paper money made legal tender by a government decree. (Oxford Language)
Currency: a system of money in general use in a particular country. (Oxford Language)
Inflation: a general increase in prices and fall in the purchasing value of money. (Oxford Language)
Hyperinflation: term to describe rapid, excessive, and out-of-control general price increases in an economy. (Investopedia)
