Understanding the Vampire Fiat Money System: Its Mechanism and Impact on Wealth
The concept of vampires, the undead creatures that rise from their graves at night to drain the life force of their victims, has been immortalized in countless films and primarily inspired by Bram Stoker’s novel “Dracula”. These creatures, capable of transforming into different forms and possessing superhuman strength, can only be destroyed by traditional defenses like garlic cloves, rosaries, holy water, or the Christian cross. The vampire myth, representing primal fears and evil, is an ancient and widespread one. Interestingly, parallels can be drawn between this horror story and the current fiat money system.
Operation in the Shadows
The fiat money system operates in a similar fashion, under the cover of darkness. Most people are unaware of how this system is structured, how it operates, or what its effects are. The majority of the population is left in the dark about the consequences of the fiat money system, which often takes them by surprise. The current fiat money system is a system where the state’s central bank holds a monopoly on the creation of fiat central bank money, while commercial banks issue their own fiat commercial bank money based on central bank fiat money.
Fiat money is created out of thin air, with no connection to “real savings”. The expansion of the fiat money supply is inflationary, leading to uneven higher prices for goods and services. The issuance of fiat money via the credit market causes a misallocation of capital, initially triggering a boom, only to be followed by a bust. It drives economies into excessive debt and allows the state to grow ever larger at the expense of the freedoms of citizens and entrepreneurs.
Unsuspecting Victims and Drained Life
Fiat money, much like a vampire, drains its victims, enabling one group to live at the expense of others. The first recipients of newly-created fiat money can use the new money to purchase goods and services whose prices have not yet risen, making them wealthier. As the money changes hands, it increases demand, and prices of goods rise accordingly. The late recipients of the new money can only buy goods at higher prices, leaving them at a disadvantage. The most severely affected are those who receive nothing from the newly-created money supply—they are, in effect, the ones “sucked dry.”
The redistributive effect of fiat money, operating in the shadows, particularly benefits commercial banks that create fiat commercial bank money, as well as those in a position to take out new bank loans in fiat money. The state and those who benefit from it are among the biggest winners of the fiat money system.
Creating Accomplices
Fiat money infects its victims, turning them into accomplices of the fiat money system. It incentivises firms and private households to incur debt and live beyond their means, made possible through artificially low interest rates. People are also encouraged to invest in assets because the chronic inflationary nature of fiat money ensures a continual rise in asset prices. Once people are lured into exposure to fiat money, their economic and financial well-being becomes dependent on the continuation of the inflationary fiat money system.
Politicians, bureaucrats, bank employees, and companies that receive government contracts all develop a vested interest in ensuring that the fiat money system is maintained. In this sense, they become fiat money vampires, feeding off the lifeblood of those engaged in productive work by claiming a share of their income.
Aversion to Exposure
Like a vampire, the fiat money system cannot withstand exposure to light. If people truly understood the negative effects of fiat money and the damage it causes, they would likely reject it. This is likely why so little is taught about fiat money in schools and universities. Its darker aspects are concealed, with the statist education system ensuring the bright light of knowledge does not shine on the fiat money system.
Until that day comes, investors should be aware of the serious economic and ethical flaws of fiat money. The uncomfortable truth is that long-term prosperity and peace cannot be sustained under a fiat money system. Therefore, it is in everyone’s best interest for the bright light of truth to expose and thus end the fiat money system.
Bottom Line
The fiat money system, much like a vampire, operates in the shadows, draining its victims and creating accomplices. The system benefits a select group at the expense of the general population. However, if people were truly aware of the negative effects of fiat money, they would likely reject it. Therefore, it is crucial to inform people about the evils of fiat money and promote a free market for money.
What are your thoughts on this comparison between the fiat money system and the vampire myth? Do you think the fiat money system is as damaging as depicted? Share this article with your friends and let's get the conversation started. Also, don't forget to sign up for the Daily Briefing, which is everyday at 6pm.
Understanding the Vampire Fiat Money System: Its Mechanism and Impact on Wealth
The concept of vampires, the undead creatures that rise from their graves at night to drain the life force of their victims, has been immortalized in countless films and primarily inspired by Bram Stoker’s novel “Dracula”. These creatures, capable of transforming into different forms and possessing superhuman strength, can only be destroyed by traditional defenses like garlic cloves, rosaries, holy water, or the Christian cross. The vampire myth, representing primal fears and evil, is an ancient and widespread one. Interestingly, parallels can be drawn between this horror story and the current fiat money system.
