Monopoly Economics

Fiat currency has become excepted as the norm in today's "global economy". What is a fiat currency? Simply  it is a type of currency in which it only has value because a government says so. Simply put, it's the same concept as a game of monopoly. When you play monopoly, every player is distributed a certain amount of money by the banker. The value of this money  is there only because all the players except the fact. It has no scarcity because the box is full of it and it is nothing more than sheets of paper. There is always more in the "bank".

This is how a fiat currency works. I will use the US economy as the example, but it works the same way with all the other fiat currencies like the euro. We start with the "bank". In the case of the US it's the Federal Reserve. The Federal Reserve is a private bank independent from the government that has been chartered by the congress to print money.  This is why they have no oversight. They have a "banker". He is  Federal Reserve Chairman Ben Bernanke.  He hands out the money to who he decides. He can just create money from thin air. He even lends money to the government.  This is where we split off from monopoly. In the game their are rules. In the real world there are not, and Uncle Ben hands out money to whoever he see's fit.

Bernanke hands out money to his friends in the banking sector. It gives an unfair advantage against banks who conduct an honest business. His friends get money for free, and the others have to borrow that at an interest rate. This gives the big banks an advantage since they get their money for free.

With a fiat currency there is no limit on the amount of money in use. For this reason if you keep your money in a bank account you actually loose money. They give virtually no interest, and as the fed keeps inflating the money supply you keep loosing. In this way Uncle Ben actually is taking your capitol because you loose the purchasing power of your savings. He will tell you this is good for the economy because it drives growth. Yes it is good, for this parties that get the free loans. For everyone else you loose. It is basically a reverse of Robin Hood. They are taking from the poor and giving to the rich.

With a gold standard, and I use that term loosely, you have a limited amount of gold, (or other commodities) and you can't just print money. Money is a finite resource. It has scarcity, and therefore value. You put a dollar in the bank today, and it will still be worth the same tomorrow, next week, month, year, etc...