Why Fiat Currency Is Better Than Gold-Backed Currency

Something I’ve been hearing quite a bit is what’s going to happen when fiat currency comes to an end. First off, fiat currency is not coming to an end any time soon, especially for the United States. A lot of times, the people that are spewing this information are either companies that are trying to sell gold, saying we’re going to go back to a gold-backed currency, so buy gold now. This doesn’t make any sense to me. Why would you do that if we’re going back to a gold-backed currency? Because if we do go back to a gold-backed currency, then your money is linked to gold. So why would you need to buy gold if it’s going to link to gold anyway? But they’re doing this to create fear and try to get people to buy more gold, because that’s how they run their business. Or it’s someone trying to promote crypto, because they want more buyers in their crypto coin, so their crypto can go up and they can make money. Or someone just trying to generate clicks on YouTube, so they can make money from advertisements. But that’s neither here nor there. Let’s look at why we have a fiat currency instead of a gold-backed currency.

One of the main reasons is that it’s easier for the central bank to control the economy and the value of the dollar. If you’ve ever looked at gold prices, they are all over the place. They go up and down, left and right. They actually follow the stock market pretty closely. I don’t think I want the value of my dollar going up and down every day like the stock market does. In fact, over the last 20 years, gold has gone up by an average of 8.65% a year. Can you imagine if inflation was at 8.65%? We went crazy over 7% for two years. If it was staying at 8% every single year, we’d lose our minds. But for some reason, people think that’s a good thing.

Another thing is that it’s a lot cheaper. I’ve noticed that the people complaining about fiat currency don’t really understand how much more expensive it is to have a gold-backed currency. If we did that, every coin that we make would need to be worth its face value in silver. That’s a lot of silver. That’s a lot more expensive than what we do now. We cut down on a lot of the costs by making the penny cost less than a penny. So if we go back to making the penny cost a penny, and the quarter cost a quarter, our government expenses are going to go up a lot. And personally, I don’t think that’s a good thing. I’d prefer if our government was spending less.

The only downside to a fiat currency is that it’s not linked to anything other than the government’s credibility. As long as the government is credible, the fiat currency is stable and fine. Yes, there are some questions there at times, but I’d much rather take that risk than the increased cost of switching back to a gold currency.