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Comment by Harry Thomas on December 30, 2009 at 5:14pm

Fiat Family Game Night ,, OMG whats next in this mind war

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Where fiat money is used as currency, the term fiat currency is used. Today, most national currencies are fiat currencies, including the US dollar, the euro, and all other reserve currencies.

The Bretton Woods system pegged the value of the United States dollar to 1/35th of a troy ounce of gold. Other currencies were pegged to the U.S. dollar at fixed rates. The U.S. promised to redeem dollars in gold to other central banks. Trade imbalances were corrected by gold reserve exchanges or by loans from the International Monetary Fund. This system collapsed when the United States government ended the convertibility of the US dollar for gold in 1971, in what became known as the Nixon Shock.

Usually, a fiat-money currency loses value once the issuing government refuses to further guarantee its value through taxation

Fiat currency was anathema to American president Andrew Jackson. Jackson went so far as to pass the Specie Circular in 1836, which required all payment for government lands to be in gold or silver coin.

The Austrian School of Economics has long held that no sound economy can long endure under fiat money[citation needed], with prominent Austrian Economist Ludwig von Mises arguing in his book, Human Action, that, "What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The credit boom is built on the sands of banknotes and deposits. It must collapse

Ludwig von Mises concluded that it was impossible for a fiat currency to establish itself without initially being based on some commodity to peg its value
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