What is happening to fiat money?
Fiat money, once the foundation of the global economy, is now losing its role. Its value is diluted, and management mechanisms are becoming ineffective. These processes create a threat to the stability of the global financial system, requiring a reassessment of the role of currencies in the modern economy.
Fiat money: what is wrong?
Fiat currencies are created by governments, and their value depends on trust in the issuer. However, there are two key problems:
1. Unlimited issuance:
Central banks issue money to stimulate the economy, cover deficits, and service debts. This leads to inflation, a decrease in purchasing power, and the inflation of financial bubbles.
2. Subjective value:
Fiat money is not tied to the real value of goods and services. Its value is determined solely by trust, which can sharply decline in times of crises, exacerbating economic instability.
Inflation: tool or problem?
Inflation has become the standard mechanism for managing debts.
Example: The US national debt is one of the largest in the world.
With an inflation rate of 10% per year, its real value will decrease to almost zero in 10 years.
This mechanism helps governments cope with debts, but at the same time dilutes the real value of currencies, creating long-term risks for the economy.
Financial bubbles and disconnection from reality
Oversaturation of fiat money has led to the following problems:
Financial bubbles: A huge amount of money circulates in the markets, unsupported by real assets. This distorts the value of goods and services.
Disconnection from the real economy: Money no longer reflects real value, becoming a tool for market manipulation.
What does this mean for the world?
Fiat money is no longer able to fulfill its historical role, becoming a tool detached from real economic processes. Its excessive quantity, lack of tie to real value, and inflationary risks pose significant threats to the global financial system.
The next step: transparency and fairness
The next article will discuss how cryptocurrencies, such as TCPcent (TCPct) and TCPcredit (TCPcr), return money to its original purpose: to serve as a measure and medium of exchange of real value.
1. What is happening to fiat money?
2. Cryptocurrencies: an alternative for the new economy
3. Restoring the meaning of money in the digital age
Read the continuation in the next article! #TCPct #TCP-MARKET