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Fiat Monetary System
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Fiat Monetary System
Fiat monetary system is known as one of the weakest monetary systems in the world. One of the drawbacks of this system is the fact that it not stable and the core foundation of the system is weak.
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Over the years many different economies have tried to make use of the system but have failed miserably. Another drawback of the Fiat monetary system is that it allows the economy to go ahead and create unlimited currency. This was one of the reasons why many governments fell pray to this system as they were tempted to create more money and make their economy strong. However, creating more money only leads to devastation as long as long term economic stability is concerned.
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The period of World War 1 saw many different countries opting for Fiat monetary system in order to create more money so that they can face the growing expenses of the war. All these European countries which opted for this option soon faced the tough consequences and in no time their economy came crashing down. One of the best examples of the ill effects of the Fiat monetary system is the downfall of Argentina. Back in the year 1932 Argentina was rated as one of the top 10 economies of the world. Infact, their economy ranked at number eight in the world. However, they too committed the mistake of opting for Fiat monetary system and within no time their name was out of the top 10 economies.
The Fiat monetary system has also been responsible to get the dollar value down. The value of the dollar was sky high when it first hit he international market. Well, even today you would think that the value of dollar is pretty high but the fact is that the value has come down drastically and it is believed that it would only come down in the near future as well.
Looking at these drawbacks one can only conclude that gold is one of the best replacements for the Fiat monetary system. The value of Gold is stable and hence one should opt for investing in gold rather than going for Fiat monetary system.
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