Transcript for Fiat Money: Explained in less than 4 minutes

The four Horsemen Production, transcribed by : Reformy.cz

since nineteen seventy one when president nixon took the united states

off what was left of the gold standard the world has operated under a system of

money call 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 on the fact that we must pay taxes in this

money

that dollar bill dot computed digit represents a dollar we pretty much

meaningless

Only the government has the power to issue fiat money but banks can created

through lending

if somebody wants to borrow ten dollars

a bank

can created from nowhere and then lend it

and it then could charge interest

banks can create money by landing against asset, such as house they are given deeds to the house

and they create money out of nowhere and it

cut interest of course

over the last forty 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 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 and

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 cheep

but prices soon rise so holders of assets such as shares or houses will

then see gains without their necessarily being any improvements to the company or

house in question.

This can often lead to speculative bubbles

Who gets this money early ?

however money is created by lending or fractional reserve banking

financial bailouts more or old-fashioned money printing. Banks are always at top or

near the top of the money issuing pyramid

next come corporations who borrowed large sums those on the lucrative

government contracts for new ventures particularly overseas

banks associate companies in partners those who borrow early at lower rates

and the bank senior employees

they all quickly get their share of the pie

in some cases this will come in the form of bonuses

but what about those at the bottom of the pyramid

Thous on fixed wages or low incomes those who live in remote areas all 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

dash savings by the mets however and their wages remain largely unchanged

in some cases they have to take on the 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 those ever-increasing gulf between rich and poor gets bigger

and bigger and bigger