The crisis of the fiat economy: this is our reality

I often criticize the economic situation in the world and in particular in the United States. Why? Because it concerns everyone- it’s important for our personal lives and for business. We try to get away from fiat economics by developing our own independent cryptocurrency projects, but we live in the real world, where fiat still plays a decisive role.

Discussing actual real economic processes, I do not turn to personalities, realizing that the main problem is not the personal qualities of executives of companies and even States, but the crisis of the economic model with which we came in the twenties of the 21st century.

The economic model has much to do with the established role of the State, which has largely arrogated to itself the right of a "global administrator", intervening in both citizens' privacy and economic processes. At the same time, instead of a State, real personalities and elite groups hide themselves behind the myth of the "public good" completely. They are the main beneficiaries of State action in economics and politics.

The crisis of this system is inevitable, and it does not depend on good and bad leaders. It is a crisis of subjectivism. If the State, as the "global manager", has the power to make decisions in favour of its beneficiaries, it will eventually do so. If the state has the slightest opportunity to spend money, it will do so even by getting into debt. Such policies destroy economic freedom and inevitably lead to a crisis.

Human history is, in fact, a history of crises.

Two thousand years ago there was a superpower of the ancient world, it was the Roman Empire. No one could match it in military, economic, and political power. There were all the attributes of great power: an invincible military machine, a hierarchy of power, democratic procedures, elaborate legislation…

And yet the empire fell and collapsed. It was not simply defeated by barbarians; the military defeats were not the cause, but the consequence of critical internal problems. And the main one was the economy.

While states currently prefer to raise funds by increasing public debt, Roman emperors have used other methods (though, of course, borrowing has also been used). They preferred to go directly into the pocket of their citizens (and other states where the Roman coin was in circulation), banally reducing the content of precious metals. Perhaps modern central bankers regret not being able to do the same.

If under the emperor Augustus (the first Emperor of Rome, the beginning of the first century AD) in the course of were full-fledged gold coins, then under the emperor Diocletian (late third century AD) the content of gold in the coins was one percent.

The policy of gold surrogates coverage led to hyperinflation and a severe economic crisis.

The empire collapsed, unable to bear the weight of its own ambitions.

Let no one be misled or reassured by the length of the process. It took 300 years to bring the gold content of the gold coin to near zero. This is the dynamic of the ancient world, where all processes proceeded much more slowly.

Today everything is different. During the life of one generation almost completely changes the technological way. There are transformations in economy, politics, social life. Overton’s windows are wide open.

What is happening now is the transition to an acute phase of the crisis of the economic system. Note: not the economies of individual states or industries, but all systems. Many subjective decisions made have had a cumulative effect, and already in the US, the world’s largest economy, experts are sounding alarms about catastrophic high public debt.

Almost nobody pays attention to another problem: the regulation of the economy. Those who deal with cryptocurrencies can feel the hard look of the Securities and Exchange Commission (SEC). Other industries also suffer from the increased attention of the authorities. As a result, we get a violation of business freedom, the emergence of a corporation-monopolies and direct state participation in business processes. All these are extremely disturbing signs.

Is there a positive way out of this?

No, we don’t have it in the current economic model. In the most optimistic case, we will see a mild crisis without tectonic shocks. However, it will not resolve the situation, but only give a delay.

The way out is to reconsider the role of the state, to give up the state regulation of business and complete freedom of business. It doesn’t matter what you call such a policy," whether it’s libertarianism or whatever, as long as the system provides freedom - business and personal.

The financial system should be based on the blockchain - the only way to ensure transparency, security and independence of finance from power. The problem is that the authorities are not going to give up their privileges, and the introduction of a new "cryptocurrency" financial system will be painful and slow. But it will. And so, let’s stay optimistic.