Fiat money is a government permission slip to slowly steal from you, and every central bank on earth runs one.
Here is how the mechanism works. Governments spend beyond what taxation can cover. Rather than default honestly, they instruct their central bank to create new currency units, purchase government debt, and inject the proceeds into the financial system. As of late 2026, the Federal Reserve held $7 trillion in assets, most of it acquired through this process. The new dollars dilute every dollar you already hold. Your purchasing power falls. Nobody ever announces the heist.
Mises called this the "crack-up boom," the terminal phase where currency creation accelerates until the public loses confidence entirely. Germany 1923. Zimbabwe 2008. Venezuela throughout the 2010s. Each collapse followed the same script: politicians facing fiscal pressure chose the printing press over honest accounting. They always do.
This also causes another problem: Prices carry information, specifically the relative scarcity of goods and the preferences of millions of people acting voluntarily. When a central bank manipulates the money supply, it corrupts that signal. Entrepreneurs invest based on distorted interest rates, build factories the real economy cannot support, hire workers for projects that only pencil out at artificially cheap credit. Then the correction comes, and you watch your portfolio, your job, your neighborhood absorb the damage that Washington's balance sheet avoided.
Sound money, whether gold or a hard-capped digital currency, removes this lever from political hands. Governments hate this removal because it strips them of the power to inflate.
Oct 27, 2026 · 5:57 PM UTC
The Bank of England confessed that 97% of all currency is created by private commercial banks rather than the government in 2014. So why do you blame government for inflation?
This changes an entire culture to a high-time preference society as, due to inflation, a penny saved is now a penny lost so better spend it. I am convinced that all sorts of insidious evils flow from fiat bc it enables spending on agendas that would never occur under sound money.
Warning, this article propounds a severe misunderstanding of money.
Neither gold nor 'hard capping' has anything to do with genuine money which has but one source - our private exchanged manifesting from our daily refreshed productive energy.
All modern exchange is fiat - unilateral barter where the buyer receives goods and the seller a receipt of obligation issued by the buyer promising future reciprocal contribution (fiat) to the marketplace.
This is self policing for, buyers who avoid obligations put themselves out of business.
Here's how it actually works: governments, having been forced by their naive citizenry to attempt to control the nation's money. Yet they’re unable to avoid the natural law of money: only created privately at purchase. They ignorantly can only issue counterfeit which gains its substance by robbing the genuine with which it blends.
Nomination of Mises as a monetary expert belies the author’s money ignorance for Mises' exalted work , 'The Theory of Money and Credit' is a labyrinthine tale of holding firmly to Adam Smith's original errors of requiring government control of money as a thing that can be created entirely separate from value exchange. Painfully the reader sees Mises experiencing that these proposals fail in the actual experience of traders exchanges, but, rather than enter new ground, he struggles mightily by formulating all sorts new modifications in compensation.
Errors are a labyrinth, truth an obelisk.
The only possible escape from our current monetary madness is to come to grips with the fact that we are the money power and must create private monetary systems entirely eschewing the distorted, corrupt US Dollar.
So close until the end.
When you write about central banks manipulating the money supply that includes any monetary authority. Capping the "money" supply in advance is central planning of the worst kind, a stab in the dark by a meglomanic with economic Dunning-Krugger.
The result is a thing incapable of providing the integrated functions of money which results in even worse outcomes than we see today.
Under inflation, a dollar today is worth far more than a dollar tomorrow. So businesses stop building for the long term and start chasing the next quarter.
Prices can’t rise too fast, or customers leave. So quality falls instead. Smaller portions, cheaper ingredients, same price.
Fast food is the perfect example. A McDonald’s burger today isn’t a cheaper burger. It’s a worse one.
Inflation doesn’t just raise prices. It rots quality.
Lesser of many evils, the nature of things n affairs. Life liberty n .. threatened violated, any monster is allowed as long as they fight for you. However like most of human ailments, dont get sick has been the best. The political powers have check n balance, 3 braches, why not #Thirdseat on financial system?
Why would governments like to inflate? What is their goal? Governments facilitate the banking industry. And the banking industry needs inflation. That’s something different.
betergeld.nu/en/
"Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others. A society that robs an individual of the product of his effort ... is not strictly speaking a society, but a mob held together by institutionalized gang violence. Economic power is exercised by means of a positive, by offering men a reward, an incentive, a payment, a value; Political power is exercised by means of a negative, by the threat of punishment, injury, imprisonment, destruction.
The businessman's tool is values; the bureaucrat's tool is fear."
- Ayn Rand
