The end of fiat — what it means

We can now recognise a path of financial and economic developments leading to the end of fiat currencies. We address what will happen unless and until a sound replacement is found.

Summary

The big surprise will be high inflation in 2026—2027, threatening to get out of control entirely. Almost no one today expects it. Government and central bank economists will misdiagnose it as usual, not appreciating that it reflects the consequences of a combination of accelerating QE and loss of faith in the value of the dollar by its foreign holders and its domestic users. Instead, the usual bogeymen will be blamed: greedy businessmen, foreign enemies, and domestic hoarders of consumable goods. Price controls will be implemented.

Instead, we will be witnessing the dollar-based financial credit bubble imploding from massive overvaluations while bond yields soar. Unless the US government finds a politically creditable way of stopping the slide, dollars and associated fiat currencies will descend into worthlessness.

The recent rise in gold prices is only just beginning to discount this outcome. It is a warning not to be ignored!