fiduciary currency

An empirical review published in 2011 by the Bank of England — not exactly a “fever swamp” — of the performance of the fiduciary currency standard relative to the performance of the Bretton Woods gold-exchange standard and the classical gold standard, found, as then summarized by Forbes.com contributor Charles Kadlec:

He is profoundly skeptical about fiduciary currency but is not, notwithstanding the book’s title, an alarmist.

Ridicule is much easier, and cheaper, than grappling with scholarly analyses such as that from the Bank of England which provided, in 2011, Financial Stability Paper No. 13, a genuinely interesting critique of the real world performance of fiduciary currency.

It’s a fiduciary currency, he writes, explaining it has no intrinsic value meaning it’s “inherently fragile,” deriving value only from “exchange either from government fiat or from the belief that they may be accepted by someone else.”

The system of purely fiduciary currency, which is in process of becoming firmly established, is not yet sufficiently stable to prevent us from being thrust rudely back into the old ways whenever we exceed the limits of our resources.