Fiat Currency, Fiat Cars – we’ve even got Divine fiat.
Published on May 11, 2011
I've been getting a number of emails recently asking "what exactly does FIAT mean?" It is banded about on the misinformation superhighway these days by lots of people – and they don’t know either. There's an honest answer/explanation and a simpler and more exact one, but they pretty much mean the same thing. Let’s see how we go.
My first definition. Fiat is a State issued, non convertible, intrinsically worthless, paper based currency. Now that’s a bit of a mouthful so to make it simpler, fiat currency is a medium of exchange that isn’t backed by anything. The belief in your Governments ability to service its debt is the only value it has.
The reason this is hard to understand is because it’s hard to believe. How can cash be worthless? Because it is, that’s why. And don’t confuse cash with currency or wealth – you’ll find those explanations on this site too – do a search.
But why ‘fiat’ and what does the word in itself mean? Fiat is Latin – no surprises there – and is ‘third-person present subjunctive’ if you want to be really picky - facere, fieri, fiat. In English it means “let there be”. And it shouldn’t be written in block capitals as you see most people do because it’s just a word.
Fiat is simply a decree or command so “divine fiat” is the command of God – “Let there be light” - and if your god can make light then the Italians can ‘make’ cars. And the brand is called Fiat. Wow! In Italy it also stands for “Fabbrica Italiana Automobili Torino” but for me, that’s more than just a coincidence. Starting to make more sense now?
So, Fiat Currency quite literally means “Let there be currency” and it is created out of nothing – it’s just made. It’s not something that exists, it is something that is done so it’s not a noun, it’s a verb!
For your earnings and savings we have a new challenge to address. A little more education brings in a new, relevant understanding which in turn brings in a new dynamic – something else to consider. And it is this. Why do folk go to work and then transfer that effort into fiat currency? Exhanging your effort into no-thing. This is madness! So let me ask you, what would it be like if you exchanged your skills, talents and efforts for some-thing of value instead? You could start today.
Fiat Currency – “Let there be currency”!
Thanks for reading!
David Peers
Partner
Point to note – I am a bullion dealer. I do this for a living. What is written here is for your education and should not be taken as ‘advice’. If you act then take some responsibility for your actions.
