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The End Of The Fiat Money Era: The Real Ponzi Scheme

 Fiat - Latin for "let it be done" is coming unglued before our very eyes, though most have chosen not to acknowledge it. At it's core, it is nothing but a Ponzi Scheme on a immeasurable scale. 

Post Bretton Woods - When the U.S. decided to abolish the gold standard, and adopt the USD as the reserve currency, we ensured the eventual collapse of the then modern fiat money system (see: From Bretton Woods To World Inflation, Henry Hazzlitt, 1974) It was a ponzi scheme in the sense that is has allowed us, over the decades to amass enormous debt without the slightest chance of ever re-paying it. We spent this dead, squandered it on useless government work programs, stimulus packages and to fund the numerous bankrupt industries run by the government ( see Amtrak , The Post Office , Roads , Banks , Housing and everything else under the sun). Everyone knows government officials can't even find their way out of a paper bag, let alone operate the largest industry in the nation. Many of them, mainly Bernanke likely work for the government due to a of a real skill set an inability to be sucessful in private industry.

Of course no one has called this a ponzi scheme, probably because we are engaging in fraud at the cost of our creditors. We try to lie to them by saying we promote "A Strong Dollar Policy". Instead of flowing funds from one investor to another in case one wanted to cash out, we merely call upon our trusted printing press to avoid the problem that such people as Charles Ponzi and Bernie Madoff had. This, however, is even more devious because we act as if we are making good on our promises, but instead making the money worthless via inflation in order to avoid and refute that argument. 

A simple comparison between a democracy and a monarchy can help expand upon this further. In a democracy government officials have a limited time in office and are soon forgotten thereafter. This enables them to engage in destructive policies just so that they can accomplish their individual goals as the reprecussions will be felt by those who replace them in the near future. Though I'm not promoting monarchy, imagina a king who someday wants to give his kingdom to his son. He will seek to keep the people happy and avoid exploitation, for if only one man were responsible for the happeninigs in an econnomy, he would not only have to worry about maintaining his role but worry about revolution or attempts on his life. 

What I am trying to get at in these brief paragraphs is that any fiat system is bound to collapse due to the inherent nature of government's desire to gain a stranghold over the economy and maximize thier influence. In our case, it has been done via war, government programs, inflation, etc. A 100% gold standard would prevent these from occuring due to the basic mechanics underlying this system. It goes as follows: Inflation would only be possible as fast as gold could be mined ( which the 19th century showed us results in deflation because increases in productivity i.e standard of living negate the 1-2% maximum). Inflating would cause gold to flow out of the country putting a natural check on government control of the mint. This would prevent programs and wars ( though not 100%) because there would be a severe lack of funding. Though this is only a rough explanation of the superiority of a REAL banking system, this is the basic premise.