The state of affairs for Fiat currencies isn't exactly going well. Recently in the UK, they had to deal with a fiat money problem. Bonds were involved and for some reason, they were affecting Pension funds. The pensions were starting to get into trouble and the central bank of the UK had to make a decision. Allow them to crash and deal with the consequences, or bail them out. By bailing them out, they had to inject liquidity into the system. UK Problem. The liquidity is only going to make the root of the problem, worse. You see, many central banks around the world are going to be faced with a problem. Let the system collapse under the weight of its poor structure, or intervene making the system even weaker and more vulnerable to the slightest crack in the foundation. There is no good solution, and it will be up to those policymakers to decide upon which problem they would rather have. Deflation or inflation. My bet is that the policymakers will choose inflation because it is probably easier for THEM to stomach. What is the right decision for the general public? I'm not sure... The difference here is policymakers act like they know what to do, but haven't made good decisions since Nixon went off the gold standard in 1971. Many charts signify that the standard of living has not gone up much (or actually gone down) since that decision in 1971. And you'd think with the explosion of technology all of our lives should be at least marginally better. That doesn't seem to be the case. Suicide rates are at or near an all-time high, obesity and mental health rates are at or near all-time highs, and making ends meet seems to be only getting harder. And if you think these metrics have nothing to do with money, you're delusional. The fiat money system has led to a culmination point in the early to mid-2020s. Death by inflation, or death by depression. Pick your poison.
Social Security Problem:
Here's another Fiat problem. The cost of living has increased for many Americans including those Americans receiving social security. Our wonderful overlords have set up a system that may ultimately fail. It is an underfunded liability. Baked into the cake of social security is something called COLA. A cost of living adjustment. And wouldn't you know, the cost of living has gone UP and UP and UP. Social Security COLA Our wonderful policymakers have decided to increase the social security benefits that many people receive. Sounds good on paper, right? Goods are more expensive, so people need more benefits to purchase them. The problem here is, who is going to pay for that increase? It won't be tax revenues unless somehow a politician somehow raises those. So what will happen is that the federal government will SPEND more money on these entitlements, but the money via taxes won't be there, so they will have to get the liquidity from somewhere. And that liquidity will come from the central bank, the FED. It will have to take some indirect route, but that is what will happen in order to pay for this liability. The debt will increase, and the total money supply, whether you measure it to be M1 or M2, will increase. And an increase in the money supply, in theory, will only raise prices up, and by now you can see that the problem is CYCLICAL. A never-ending hamster wheel of death. When money gets issued, it's not as if all of that money goes to its intended purposes either. A lot gets swallowed up by the system before it reaches its target audience. This is known as the Cantillon effect. The new money goes to the people closest to the money printer. Those are things like: politicians, the stock market, hedge fund managers, banks, etc. This is why so many "passionate" people become Washington D.C. pundits. They position themselves close to the money spigot, get the reward, and life is grand. For them, not you.
Inflation is still running hot and unless it cools off, the FED is going to have a massive decision on its hands. FED PIVOT Here is how I see it. If inflation is hot, the fed will NEED to raise interest rates to bring down inflation. Loosening regulations would also help, but nobody talks about that anymore, to be honest. If they RAISE interest rates it will be harder to pay off the debt AND for reasons, I don't want to get into that SHOULD drive down equities. Less free money, lower stock values. Well, people don't like when their wealth goes down, and many connected individuals may put some pressure on the FED to STOP raising rates so that their wealth (in nominal turns) can go up. So the FED can either screw the proletariat by choosing to maintain or lower interest rates thus forcing inflation to go up. Or they can punish the people who have a lot of assets and stocks by raising interest rates. I'm pretty sure history tells us that they will choose to screw the proletariat and they will PIVOT their policy from Tightening > Loosening. Albeit both decisions are bad because fiat problems have already manifested, so really it's just a LOSE, LOSE situation here. And while he doesn't know how to take a computer screen-shot, Peter Schiff, has brilliant analysis in this area. Listen to him to determine what YOU think the fed will do.
One more problem that I'd like to briefly touch on are CBDCs. Central Bank Digital Currencies. Too much information here to discuss, however, if fiat governments are ever going to fulfill their evil desires it will certainly be with a CBDC. The money they control every aspect of. It is a Communist's dream, and Communist's dreams often end in mass death. Not exactly something I am looking forward to.
Alternative to Fiat:
Litecoin is different. Litecoin is very different. You sign up for the Litecoin standard and OPT in. In the fiat world you are forced into it, and before crypto, couldn't OPT OUT of it. Gold tried to be an alternative option to fiat but ultimately failed. Do you see the differences here? Fiat can be sabotaged, gold ultimately failed, and now many people are going to try crypto. The project of Litecoin, beyond recent price movements, has gone exceedingly well. 100% uptime, continued innovation, and all the benefits of an incorruptible scarce digital resource. 84 million LTC coins that can never, by design, be sabotaged by bad actors. Beautiful computer coding.
While fiat currencies continue to display their problems, Litecoin has only improved. Here are just a few things Litecoin has improved upon since its release: SegWit, MWEB, Privacy, Fungibility, wallet technology, security technology, mining technology, payment technology, merge mined with DOGE, reduction in transaction fees per byte, improved hash-rate, stronger censorship resistance technology, and so on. Things will only get better because of the nature of its coding. The base layer of Litecoin can not be F'd with. And any experiments and improvements can be improved on-chain (or if deemed too risky) on a side chain or layer 2/3. The base layer of Litecoin is not going to get demolished. It is secured by the amazing technology of Proof of Work mining/consensus. Here is the main point of this article. The base layer of fiat is getting worse (and perhaps can only get worse by design) and Litecoin technology can only get better. Which system will the people ultimately choose? A system designed to get worse (FIAT), or a system designed to get better (Litecoin). It'll be the latter.