What Is Fiat Money? Understanding Currency Basics
Fiat money is government-issued cash whose value rests on public trust, not commodities. This primer explains how fiat works, its role in monetary policy, and why stability matters.
central banking
Understanding Fiat: The Backbone of Modern Financial Systems
Fiat currency, the backbone of today’s financial systems, derives its value from government backing rather than physical commodities. Understanding its implications is crucial as it shapes economies, influences trade, and affects global markets.
Understanding Decentralization: The Key to Bitcoin’s Future
Decentralization lies at the heart of Bitcoin’s design, ensuring security and resilience against censorship. As nations grapple with regulatory responses, understanding this core principle is vital for the cryptocurrency’s future stability and adoption.
Central Bank Group BIS Names Hernández de Cos as Next General Manager
The Bank for International Settlements (BIS) has appointed Pablo Hernández de Cos as its next General Manager, effective January 1, 2024. Hernández de Cos, currently the Governor of the Bank of Spain, will lead the BIS in advancing global monetary cooperation.
Fatal Flaws in Modern Monetary Theory
**Fatal Flaws in Modern Monetary Theory**
Modern Monetary Theory (MMT) has gained traction as an alternative economic theory. However, it faces severe criticisms due to its fundamental flaws.
Firstly, MMT assumes an unlimited capacity for government borrowing, ignoring the risks of high inflation and unsustainable debt levels. Secondly, it downplays the importance of fiscal responsibility, potentially leading to reckless spending and budget imbalances.
Furthermore, MMT’s reliance on inflation as a way to finance government spending overlooks the negative economic consequences of rising prices. Inflation can distort markets, erode savings, and harm low-income households.
These fatal flaws cast doubt on the feasibility and viability of MMT as a sound economic policy framework. By undermining fiscal discipline and disregarding the dangers of inflation, MMT poses significant risks to economic stability and prosperity.
What is quantitative easing, and how does it work?
Quantitative easing is an unconventional monetary policy employed by central banks to stimulate economic growth. It involves the purchase of government bonds and other financial assets, which pumps money into the economy and lowers interest rates.