Will The Fiat Money System Collapse?
In 1971, Richard Nixon single-handedly took the world off the gold standard. Ever since, many commentators have been of the opinion that the monetary system of the world will face a complete collapse. These fears get exaggerated every time there is a crisis. For instance, during the 2008 crisis, many people felt that the dollar will be highly devalued. Newspaper articles predicting hyperinflation and even the complete collapse of the fiat currency based system were common.
However, such a collapse has not happened. Hence, can it be said that the threat of the collapse of the monetary system is a figment of the imagination of economists who predict economic doom? It seems like the global financial elite has found a way to inflate the currency without having any negative effect on the economy.
In this article, we will have a closer look at how this inflation works.
To sum it up, right now we are facing credit crises. The government is responding to these credit crises by producing more currency. However, if this is done several times, it may end up in the collapse of the monetary system. This means that these doom and gloom predictions are not really that far-fetched. From an investors point of view, this means that a certain percentage of a persons portfolio must always be kept in tangible non-monetary assets.
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