Friday, February 10, 2017

Real Asset

Fiat money is currency established as money by law. It has value because the government says so. That matters because what the government says is backed up with tax (payable in that currency), prisons (where you go if you don't pay the tax) and law enforcement (the people who will make sure that happens). Hut Taxes were one of the first ways the British Government forced people to shift from rural subsistence. It led to many revolts. Money isn't a real asset. Ask Zimbabweans. Read about the Weimar Republic in between the two world wars. Money isn't actually a thing. It is a promise or a catalyst - meaningless if no one believes in it. Debt is much the same. Which is why inflation destroys both. If all the money and debt in the world disappeared, nothing would have actually disappeared. Real assets are tangible. They do stuff. They exist outside of the stories we tell ourselves. Money is a story. A powerful story, but a story nonetheless.

Yuan Dynasty Banknotes
The earliest known fiat currency

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