By Thorsten Polleit
I.
Today's worldwide paper-, or
"fiat-," money regime is an economically and socially destructive
scheme — with far-reaching and seriously harmful economic and societal
consequences, effects that extend beyond what most people would imagine.
Fiat money is inflationary; it benefits
a few at the expense of many others; it causes boom-and-bust cycles; it leads
to overindebtedness; it corrupts society's morals; and it will ultimately end
in a depression on a grand scale.
All these insights, however, which have
been put forward by the scholars of the Austrian School of economics years ago,
hardly play any role among the efforts of mainstream economists, central banks,
politicians, or bureaucrats in identifying the root cause of the current
financial and economic crisis and, against this backdrop, formulating proper
remedies.
This should not come as a surprise,
though. For the (intentional or unintentional) purpose of policy makers and
their influential "experts" — who serve as opinion molders — is to
keep the fiat-money regime going, whatever it takes.
II.
The fiat-money regime essentially rests
on central banking — meaning that a government-sponsored central bank holds the
money-production monopoly — and fractional-reserve banking, denoting banks
issuing money created out of thin air, or ex nihilo.
In The Mystery of Banking, Murray N.
Rothbard uncovers the fiat-money regime — with central banking and
fractional-reserve banking — as a form of embezzlement, a scheme of
thievery.
Rothbard's conclusion might need some
explanation, given that mainstream economists consider the concept of fiat
money as an economically and politically desirable, acceptable, and
state-of-the-art institution.
An understanding of the nature and
consequences of a fiat-money regime must start with… (Read more)
Source: Mises.org
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