Fiat Currency Defined

What is Fiat Currency

Fiat Currency Defined

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What is Fiat Currency?

Definition: fi·at [fee-aht, -at; fahyuh t, -at] noun: fiat; plural: 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 country’s currency is found in the innovation & productivity of its people. The ideas and skills to execute those ideas allow thinkers and doers to collaborate and create. Its value is found in 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 demonstrate my thesis. But look at the strides made in medicine and pharmaceutical research from the 1960s 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 alternative solutions. Therein lies progress in its purest form. Solutions hold 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 the 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.  Just as every country needs to find its role in making the world great.

A Look Into The Crystal Ball

The crystal ball says the “me” generation will morph back into the “we” generation.

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 about who said these words; take note of the message. For it’s a message whose time has come.

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 hearing them.

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