Paper Money System Is Doomed: Why the World's Fiat Money System is Doomed to Fail

The world’s paper money system is doomed. Thanks to the Federal Reserve and other central banks, no currency in the world is backed by anything tangible, not even gold or silver. Instead, the value of all currencies depends entirely on faith in government institutions to preserve their purchasing power. Since most governments are spending themselves into bankruptcy, that faith is rapidly waning, and fiat money will soon be recognized as the farce it has always been.

Welcome to the new world

Most people never consider what it would be like if all of the physical money suddenly disappeared from their homes. Nowadays, cash transactions account for less than 10% of money spent by consumers. This means that any process breakdown or power outage at your local bank could have an enormous impact on your life. And yet, most people still keep a stash of cash in their homes for emergencies and other unplanned expenses.

How our world economy depends on paper money

Cash has always been king when it comes to transferring value. No longer will people carry paper money with them wherever they go. Physical cash meaning no longer there as money disappears from home and digital wallets become popular payment methods for many transactions that are not just replacing physical cash but also credit cards and check-cashing services.

The consequences of the constant creation and destruction of paper money

Physical cash meaning is being threatened by new technology, especially when it comes to international money transfers. New startups like TransferWise and Dwolla have been promoting easy money transfers through banks to reduce costs and send funds faster than a wire transfer. What they may not realize is that they are also hastening the world's paper money system demise.

Underlying reasons why we need to change our economic system

The old system of trading money for goods and services has been around for centuries, and with time, it has become outdated. Here are some key reasons why it needs to be changed now, or shortly. 

1) It could be predicted that money will disappear from home – increasingly more people are choosing cashless transactions as they become more convenient and due to a lack of cash machines. The assumption is that physical money will eventually disappear. 2) The introduction of mobile devices has revolutionized our lives because we can now access information 24/7; banking becomes easier too with innovations such as paying bills via your phone or credit card details saved on your phone.

Alternative economic systems exist - let’s use them!

Some people believe that in this new world, physical money will disappear and all of our transactions will be done on electronic devices. While the electronic banking system is booming and clearly a more convenient way to do business, many alternative economic systems have been proven to work. Indeed, in Western economies, it seems inconceivable that cash could become obsolete; however, consider what happened in Germany after World War II where there was a shortage of small change. 

The German economy ran smoothly even though there was no monetary system as we know it today. Instead, they used vouchers and distributed resources with ration coupons. Imagine how different your life would be if you were never able to use cash at all?

We must start using alternatives now.

Cash may be king for now, but it won't be long before physical money disappears. To survive the coming upheaval, and be ready for a cashless world, we must start using alternatives now. However, we also need to start preparing ourselves and our families for what this means regarding lifestyle and budgeting. Here are five things you should know about why paper money will soon disappear as part of a bigger picture of evolving technology and innovation.

Revolution, Change, Transformation - Not Evolution

The paper money system was doomed from its inception. Banknotes were not backed by anything, but we assumed that their issuing banks were reasonable credit risks so our currencies did not come from anything but these promises. The idea that all modern money would be virtual and not backed by anything has a long history. Advocates for a new system, often called free banking, have included John Law and Frederick Hayek (though Hayek later changed his mind). A century ago, classical economists argued for hard currency or bullion-backed banknotes. Is cash still king? We must always keep in mind that our paper money system as we know it will never go away.

Thanks for reading! We hope you found this post helpful. If you have any questions or suggestions please let us know in the comments below.