Chapter 15: The Gradual Implosion Of The Fiat System
Bitcoin wouldn't exist without the financial crisis of 2008. This chapter takes a look at the roots of the upcoming crisis in fiat currency and banking. It cites influential economists, bankers, historians, and hedge fund managers who have looked at financial crises up close for decades.
Fiat currency and central banks evolved as part of the competition between nation states, but they have progressively become captured by political interests that benefit from permanently low interest rates and high rates of government borrowing. This has created the largest credit bubble in history, to the point that governments cannot raise interest rates without crashing the economy, so they elect to print money through a process known euphemistically as "quantitative easing". This process has caused huge asset inflation, but it has also diluted everyday people's wealth and savings and has saddled future generations with debts they can never repay.
Blockchain and decentralized digital assets are a potential check on this process, as they represent:
- A currency that cannot be inflated away or governed by any state
- A system to issue new assets to be exchanged for fiat, enabling a more democratic marketplace.
In a world with increasingly unstable unbacked fiat monetary systems, true decentralized digital currencies and assets will find increased adoption, as people and governments see the value in owning assets that are personally held, more deflationary than gold, and impossible to interfere with the exchange of.