03 Aug Fiat Currency Defined
What does Fiat Currency mean?
Fiat Currency Defined: fi·at [fee-aht, -at; fahy–uh t, -at] noun fiat; plural noun: fiats
- a formal authorization or proposition; a decree.
“The King ruled by fiat”, “A political union imposed through imperial fiat”
- An arbitrary order.
“By royal fiat”
- Fiat currency defined: Fiat currency is legal tender, not backed by collateral (i.e., gold), but whose value is presumed by those accepting it in exchange for goods and services.
Fiat Currency Today
The term fiat currency has morphed to mean something else today. Partly because the days of crusaders and Kings has ended and in their place grew various forms of democracy: equality of education, greater mobility and access to information, etc. By allowing the masses to innovate and create left the world a very changed place from the days of marauding ships sailing the seas with plunder aplenty.
Fiat Currency…is PEOPLE?
Perhaps the value of a countries currency is found in the innovation & productivity of its people. The ideas and skills to execute those ideas allows thinkers and doers to collaborate and create. Its value is found in the Bill Gates, Steve Jobs, Mark Zuckerberg and millions of other Americans who wake up in the morning and think about something of consequence.
Technology is an easy analogy, low hanging fruit to show my thesis. But look at the strides made in medicine and pharmaceutical research from the 1960’s onward. Those advances cannot be denied as having true economic value to our countries GDP and by proxy, our currency. Perhaps it’s not as sexy as converting the world from DOS to Windows. But saving lives and eradicating diseases is a major contribution to the world. Failed experiments inspire people to seek alternate solutions. Therein lies progress in its purest form. Solutions holds many forms: they may be cheaper, more portable or meet some other necessary need for which society will pay.
Innovation To Actualization: The Fluid Value Chain
Does this mean our currencies value is backed by a handful of successful innovators? What we know about value chains indicates otherwise. To actualize each innovation takes multitudes of processes, skill sets and expertise.
As the saying goes “not everyone can be quarterback”, we all have our position on the team. Some contributions will be based on physical largesse others will design the processes by which parts are made and yet another team will subsequent assembly those parts.
So whether you’re the wheel or the spoke, no matter how large or small you perceive your contribution to be, you are part of some value chain. As such you’re part of our collective “fiat currency”.
The United States has lost top position for literacy amongst other skills required to bring innovation to fruition at its highest level. In order to regain our status we need a shift in our values and a shift in our collective self esteem. Each citizen needs to see their role in making their country great.
A Look Into The Crystal Ball
The crystal ball says the “me” generation will morph back into to the “we” generation. Take a look at this great interactive from The Financial Times here.
Great things can happen when people work together. We all benefit from working for the common good. Most of all, it’s time to ask what we can do for our country, not what our country can do for us. Don’t fret by whom said these words, take note of the message. For it’s a message who’s time has come.
But, what do I know? Heck, I thought it was Keith Richard on our $20 bill, not Andrew Jackson.
N.B.: This blogger is not a trained economist. This blog is more based more on my hopes to leave the world a better place than when I came into it. But that’s about as deep as it gets guys. So anyone who has thoughts on this subject, trained or otherwise I’d enjoy reading them.