Book Presentation | Better Money: Gold, Fiat, or Bitcoin?

New Media UFM  | 08 de agosto de 2023  | Vistas: 64

In this book presentation, economist and professor Lawrence H. White introduces his work Better Money: Gold, Fiat, or Bitcoin?, where he explores the differences between fiat money, gold, and Bitcoin. The book examines how each system operates, their advantages and drawbacks, and their responses to economic shocks. White highlights misunderstandings between Bitcoin and gold advocates, noting that both propose alternatives to fiat money. Unlike gold or Bitcoin, fiat money gains its value solely through government decree, making these contrasts crucial for analyzing future monetary options.

Fiat money is just a name for the kind of money we have today. It's money by decree.” —Lawrence H. White

On the other hand, Fiat money gained prominence after the abandonment of the gold standard, particularly during World War I. Previously, banknotes were redeemable for gold, but this changed when governments stopped backing currencies with precious metals. As a result, the value of money came to rely solely on government decree. Consequently, this shift led to the rise of central banks and the monopoly over money issuance, eliminating alternatives such as gold.

Although economic theory suggests that fiat money can function in principle, real-world outcomes have differed. Since 2000, inflation in countries such as the United States and the UK has fluctuated, but it spiked in 2022 due to money-printing policies during the pandemic. As a result, central banks failed to withdraw the excess money promptly, causing inflation rates of up to 9% in the U.S. This situation reveals the instability inherent in fiat money systems.

This is the problem with fiat money: high inflation. Not just high inflation, but unpredictable inflation.”—Lawrence H. White

In addition, Gold and Bitcoin are both viewed as hedges against inflation, but they operate in very different ways. While gold has a flexible supply influenced by mining, Bitcoin operates on a fixed supply schedule coded into its programming. However, Bitcoin’s predictability comes with high volatility, raising concerns about its long-term stability. In contrast, gold has shown relative stability over time, reinforcing its role as a trusted store of value.

Finally, Lawrence H. White emphasizes the need to explore new monetary solutions beyond government control. Hayek advocated for private production of money, arguing that governments have failed to provide monetary stability. However, the adoption of Bitcoin and other cryptocurrencies shows potential in countries with high inflation, but their volatility remains an obstacle to their success as a universal currency.

Explore more content at http://newmedia.ufm.edu to further deepen your understanding of economics and its impact on everyday life.