What Is FIAT Currency?

What Is FIAT Currency?

When Governments first created the FIAT currency,  they must have sang the Spanish song Que Sera Sera, whatever will be will be.  Even by Bank Of England’s own admission the Fiat currency they create have little or no intrinsic value in themselves and not convertible into gold or silver,  but made legal tender by fiat (order) of the government[1].  Fiat is the Latin word for “it shall be”.

Who is responsible for this fiat currency?

I’ll use the USA’s Federal Reserve in this example, if you’re in the UK substitute this for the Bank Of England, in Germany use the Deutsche Bundesbank, the French have the Banque de France and so on…

Nearly every country in the world has its own equivalent of a Federal Reserve,  which is not a government entity,  but a private sector company with shareholders and pays dividends.

Yes,  you read that right;  The Federal Reserve,  Bank Of England,  Deutsche Bundesbank,  Banque de France,  etc are private organisations,  which pay bonuses to its rather secret and select members at the expense of the mass population.

Have you ever wondered how Fiat currency is created?

When the government pledges to build more roads, schools, hospitals, health care programs, fighting wars,  etc,  it requires cash to do this.   In order for this to happen the Government Treasury department issues a treasury bond to cover this spending spree,  also known as deficit spending.   A treasury bond is a national debt placed on its people.  A Treasury bond auction takes place with the world’s biggest banks bidding for the treasury bonds.

The winning bank then applies interest to the bond and takes some of the bond to the Federal Reserve, which issues a cheque. Here’s where the “Sleight Of Hand Trick” comes into play.  The Federal Reserve has not got one penny to back this treasury bond.  The Fed issues a cheque, based on no intrinsic value and as if by magic,  “it shall be” Fiat currency enters into existence.  Some will be printed onto paper,  such as the dollar,  the pound,  the euro,  the rest will be digits on a computer screen.

The world’s biggest banks takes the Fiat currency,  sells this back to the Government Treasury with added interest, buys more treasury bonds, takes the new bond to the Federal Reserve with added interest, more Fiat currency is issued, sold back to the Treasury,  plus interest, raising the national debt and placing this debt on to future generations. (Hence the word bond coming from “Bondage”)

The world’s biggest banks act as middlemen, charging interest at every opportunity whilst the fiat currency merry-go-round continues, in what can only be called a Ponzi scheme.


How does Fiat Currency affect you?  

Put simply every Pound, Dollar, Euro, Yen, Ruble, Yuan, Rupee, etc has been borrowed into existence. This “by order of your government” fiat currency has been created out of thin air.

Interest has to be paid for this paper creation and on the digitised version. This interest payment goes straight to the central banks coffers as well as the Federal Reserve, Bank of England, etc and not to their respective governments.

All Governments with a Fiat currency system are in debt to their own version of the Federal Reserve via the Central banks and cannot afford to pay off their debts. So, the government creates a tax system, collected by the likes of the IRS in the US, HMRC in the UK and subsequently pay back the central banks. The collection of taxes is not enough to cover the loans and so the debt is growing in ever larger quantities. In order to pay the interest on the original loan (deficit spending spree), more currency has to be created to service the interest owed on the original debt.

Fiat Currency

The loan now has to be paid back, with interest added. Our governments have to borrow more currency in order to pay the interest, so the debt always remains.

The government think tanks come up with newer ways for us to be taxed. Here are a few examples, duty on goods, car tax, income tax, import tax, airport tax, local housing or council tax, and so on. So, the people are saddled with their own inept, good for nothing, government free spenders, singing Que Sera Sera, whatever will be will be.

Finally,  as more currency will be created to help fight the wars,  build new schools,  hospitals and health care programs,  FIAT currency will devalue.  The clever money will move into the true currency of the world and  physical precious metals,  such as silver and gold will envitably find their true intrinsic value.

[1] Source: Financial Times