Fiat Currency Graveyard: A History of Monetary Folly - Gini Foundation (2024)

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What is the fiat currency graveyard? ›

The Fiat Currency Graveyard

Hyperinflation is one of the most common precursors to a fiat currency's collapse. Keep in mind that most of these currencies below collapsed within the lifetime of most Baby Boomers living today. So, hyperinflation and currency collapses are not exceptionally rare events.

Inflation would result if the dollar collapsed, decreasing the real value of the dollar compared to other global currencies, which in effect would reduce the value of your 401(k).

The U.S. dollar, the euro, the British pound, the Japanese yen, the Albanian lek, and the Indian rupee are all examples of fiat money. Because it's a currency that is backed by an issuing government, fiat money usually provides some economic stability—but not always.

Subject to manipulation: Since there is no limit to the amount of fiat money in circulation, it is subject to constant manipulation by the central bank and the government. This can lead to inflation, interest rate manipulation and other issues.

A fiat-money currency greatly loses its value should the issuing government or central bank either lose the ability to, or refuse to, continue to guarantee its value. The usual consequence is hyperinflation.

Prior to 1971, the US dollar was backed by gold. Today, the dollar is backed by 2 things: the government's ability to generate revenues (via debt or taxes), and its authority to compel economic participants to transact in dollars.

In 2024, the dollar has regained some ground, though it's somewhat lower now compared to earlier in the year. Changes in valuations between the two currencies have been less volatile recently than earlier in the past decade. Calculated based on data from the Board of Governors of the Federal Reserve System.

This dominance as a reserve currency and its root as a currency peg means that the world economy is, in many ways, reliant on the dollar. As of the fourth quarter of 2022, 58.36% of all global reserves are held in US dollars. For this reason, the US dollar crashing by itself is close to impossible.

What to Own When the Dollar Collapses. Historically, tangible assets like gold and real estate have been sought after as they tend to retain intrinsic value. Investing in commodities such as precious metals, oil, and agricultural products is also considered a smart choice.

If it's been a long time since you pulled out actual dollars and coins to pay for something — here's a conversation for you. It might seem like cash is slowly becoming obsolete. But, Brett Scott says it's a false narrative that we're all pining for a cashless society.

What will replace the dollar? ›

A future counterweight to the greenback could take a number of different forms, such as a central bank digital currency, a stablecoin, a basket of existing BRICS currencies or a currency backed by precious metals like gold and silver.

Critics say there are massive privacy and security issues and an electronic currency could give the US government unprecedented control over transactions. Federal Reserve Chair Jerome Powell said in March the possibility of launching a digital dollar in the US was slim to none.

Narrator: The United States ended its attachment to the gold standard in 1971, converting to a 100% fiat money system. Today, there isn't a single country that backs its currency with gold.

Bitcoin distinguishes itself from fiat currencies through mechanisms like the Bitcoin halving that controls its inflation.

The United States dollar is the official currency of the U.S. Learn about the bills and coins that make up U.S. currency.

Fiat currency—the unsecured paper known as green backs—was printed and used to pay the troops and their suppliers.

'Italian Automobiles Factory of Turin') is an Italian automobile manufacturer, formerly part of Fiat Chrysler Automobiles, and since 2021 a subsidiary of Stellantis through its Italian division Stellantis Europe.

Tether (USDT) is a stablecoin, a cryptocurrency pegged to and backed by fiat currencies like the U.S. dollar. An altcoin is a cryptocurrency or token that is not Bitcoin (BTC). Etherum (ETH) is an altcoin. Learn about altcoins and what makes them different.

Well, all FIAT currencies in history so far have gone to zero. The main currencies we have now are all heading that way. Gold and silver are real money and currencies are just currencies. Currencies are not “stores of value”.