Deutsche Bank has released a report arguing that the next decade could usher in the end of fiat currencies. Could their analysts be right? And what part does cryptocurrency have to play in that?
Did Fiat Money Create Inflation?
Imagine 2030, a special edition of Konzept, released by the research team at German banking giant Deutsche Bank, suggests that certain factors that have held the fiat money system together since the 1970s are beginning to weaken.
With the collapse of the gold-based Bretton Woods global monetary system in the early 1970s, national currencies became de-linked from precious commodities like gold.
It’s replacement, fiat money, was based on little more than trust in the government’s ability to maintain its value. The independence of fiat money from any inherent backing, however, introduced the problem of inflation.
Governments became free to print as much or as little money as they wanted in response to perceived economic needs. Society has become so attuned to the notion that prices always rise, that it is easy to forget that, save for rare events of upheaval, inflation did not significantly exist prior to fiat being freed from its commodity backing.
The chart below demonstrates a substantial spike in consumer prices from 1970 to the mid-80s: Read More...