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Fiat Money: Explained in less than 4 minutes

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The four Horsemen Production, transcribed by : 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

Video Details

Duration: 3 minutes and 48 seconds
Country: United States
Language: English
Genre: Animated
Views: 745
Posted by: on Dec 27, 2011

Despite every effort by governments, the gap between rich and poor continues to grow. It is now the biggest it has even been in history. All sorts of reasons for this have been proffered, but few, however, seem to realise that is a simple, inevitable consequence of our system of money and credit. This video, a shorter version of which appears in the film The Four Horsemen, explains ...
Written and narrated by Dominic Frisby
Animated by Pola Gruszka
Produced by Renegade Economist

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