Tuesday, August 5, 2014

Hulsmann on the Cultural Consequences of Fiat Money

Our current monetary system is one of fiat money. The monetary units of all modern nations are money based on nothing but the government's say so. They ceased to be money substitutes for gold when the world left the last semblance of the gold standard back in 1971. In a lecture he recently gave at Mises University at the Ludwig von Mises Institute, Guido Hulsmann explained the broader cultural consequences of fiat money. You can watch it below:

Hulsmann notes that economic phenomena help determine the culture of any society because the human action which is manifest in culture always involves using scarce goods.

The question he investigates is how does government intervention of fiat money change the culture. Hulsmann explains both the direct and indirect consequences of fiat money. He argues that the direct consequences of fiat money is centralization of government and tyranny, and the indirect consequences mainly flow from debt culture that is fruit of fiat money.

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