WEB Notes: This article will provide someone with little understanding a bit more insight into the money system. No, this is not a hint to go buy gold and silver. We already explained how you can prepare for the days ahead. After you read this, add The Money Masters to your education list.
The primary reason nations use fiat money today is that it doesn’t limit how much of their currency they can put into circulation.
This reality starts with the meaning behind the word “fiat”…
The term fiat may sound obscure, even mystical, but it’s actually straightforward. Fiat is Latin for “let it be done,” or “it shall be.” Apply that definition to money and it simply means that currency is “money” because a government says its money. The dollar bill in your wallet is money by government decree.
It also means that this form of “money” is not backed by anything — gold, for instance. If a nation is on a gold (or silver or other commodity) standard, the government can only circulate the amount of currency that corresponds directly to the amount of gold it owns, which would increase slightly each year. Gold has worked well in the past, because the amount of new gold coming to market each roughly corresponds to the growth in the US population.