The United States dollar isn’t backed by specie of any type, though it is backed by the “full faith and credit” of the United States government, which in consideration that this government is now consistently running governmental deficits of at least one trillion dollars yearly, would seem to suggest that this full faith and credit probably doesn’t mean all that much, especially should a devastating worldwide financial crisis come.
The problem with fiat currency really comes down to its credibility. When businesses and people no longer believe the currency has lasting value, they will look for alternatives that offer greater comfort and safety. Indeed, as long as this government can simply print money, willy-nilly, and the people aren’t any wiser to the game, the more that this will continue, until it can continue no longer.
So too, the reason why $1 today is not the same value as $1 ten years ago, has everything to do with the debasement of the currency which seems to be deliberate on the part of this government, because if this government really prioritized its fiat currency it would do everything within its power to make fiscally responsible decisions that would stabilize its currency as opposed to being fiscally irresponsible.
The most important thing to recognize about fiat currency is that the value of the currency is only as good as those who utilize it, give value to it, and when that value goes down, for they don’t want to be stuck holding dollar bills, because they have no confidence that it would be financially sound to do so, it weakens the dollar even more.
While the United States dollar makes transactions of all types pretty much seamless, that doesn’t mean that an alternative source of money representation might not be more suitable, especially considering that for those who have their assets locked up in paper currency need to be cognizant that should that paper currency be severely devalued, it would not be good for them.
In this day and age, there are alternatives to dollars, such as in basic commodities, specie, crypto, and pretty much anything that has intrinsic value. The best of these is not going to be crypto, because crypto isn’t all that much different from fiat currency, but rather the best of these alternatives are going to be items that have intrinsic and often historical value, such as gold, silver, oil, and the like. That is to say, there isn’t any reason why a contract could not be written up in which the payment is based upon specie, oil, or some other commodity as contrasted to the United States dollar. So too, material goods always have value, so that those that are cash short, but property rich, are going to be in a heck of a lot better position than those that simply have cash, because housing, vehicles, and other worthwhile material goods have value, and will always have value.
Those who are paying close attention to their assets need to understand that fiat currency should properly be something to be avoided when it comes to counting up their assets, because it is only a matter of time before the United States dollar will be significantly devalued, and those holding dollars will have definitely backed the wrong horse.