Fiat Money and its Effects on Spending Behaviour

13일 전

The endless flood of paper and credit money, created by retail banks through fractional reserve banking and central banks through means of purchasing treasury bonds, lead to an ever increasing willingness of the people to make debt. The continuous creation of money equals inflation, making goods and services more expensive and leads people to indebt themselves.

The dwindling purchasing power of fiat money rewards spending and penalizes saving.

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Saving money used to be an effective mean of precaution, when it's purchasing power was not melting away like butter in the sun, but instead grew in value because of sinking prices. Regular people without understanding of the fiscal markets were able to save up effectively just by putting money under the mattress.

Compared to today, that idea is ludicrously ineffective.

Hoarding papermoney in today's day and age does not make sense as it's purchasing power decreases rapidly and if needed one day, it could only afford a fraction of it's former value. The sooner you spend your money, the more you get out of it.

Going into debt therefore has become a rational strategy to acquire assets, which are likely to increase in value in accordance to inflation. Whilst our grandparents were still able to save up for 30 years to buy property, people nowadays start building a home when their income suffices to service the debt affiliated with it, often ending in financial and personal catastrophe.

This also gave rise to a financial industry without bounds, that enabled financial and moral indebtment of this scale, which is now frowned upon in the emerging crisis and all the ones before.
The boundless inflation of fiat money has driven the people into unprecedented financial dependency like no generation before. The nature of fiat money creation changed the perception of debts from being frowned upon to clever means of affording things, whether it is state-owned, corporate or personal. Every chance to get state benefits is exploited and welcomed. Everybody involved is chasing yields, to counteract the ever decreasing purchasing power of their money. This leads the population to have less objections to the government amassing public debt and financing their life's through debt on a personal level.

Opening the news every morning, it becomes more and more evident that we are on the brink of the next financial crisis. Note how the timeframe of their occurrence seem to shrink at immense pace, the last one happened just 10 years ago.

Even though it is widely feared, and the governments and banks globally are pulling every ace out of their sleeve to prevent it, a recession followed by a depression seems inevitable and even needed. Not only will it correct the structures of our current economy, but also the questionable personal moral of people that leads them to amass huge debts. As this has been dragged out for so long by fiscal tricks, even though it seemed needed, the magnitude of this is now on a whole different level. War, social unrest, revolution, increasing crime rates and spontaneous eruptions of violence, corruption and deceit may well be the consequences. But the longer it drags on, the more likely these events will become. The financial elite seems out of options to prevent the next looming crisis. Draw your conclusions and be prepared.

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smart and redpilled

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This post has received a 34.72 % upvote from @boomerang.

The financial elite benefits the most from a recession. They created the fiat money system and a recession allows them to buy assets at the bottom. When we recover, we find the rich are getting richer while everyone else is stagnant.