Kerby Anderson

“This year marks the fiftieth anniversary of the U.S. government closing the gold-exchange window and putting the world on a fiat monetary system.” That is how Saifedean Ammous begins his book, The Fiat Standard.

His earlier book, The Bitcoin Standard, was a bestselling book that has been translated into more than 25 languages. He argues that only by first understanding the operation of bitcoin can someone understand the equivalent operations in fiat. “It is easier to explain an abacus to a computer user than it is to explain a computer to an abacus user.”

Why the complexity? The reason is simple. The fiat system we use today was not a carefully constructed economic system. It was not a deliberately designed operating system like bitcoin. Rather, it “evolved through a complex process of compromise between political constraints and expedience in managing government default.”

The impact of fiat currency is that it affects what economists describe as time preference. A person with high time preference focuses on present needs, while a person with low time preference is willing to delay present gratification and places more emphasis on future needs.

When the world was on the gold standard, people knew that money would hold its value in the future. This enticed people to save. But when the countries moved to fiat currency, the value of the currency declined and there was less inclination to save.

His book describes how the “fiat standard” has affected our lives today. He provides detailed explanations for why the quality of the buildings we construct and the goods we buy are declining. That is due to our declining dollar. Read his books so you can understand his diagnosis and his remedy.