What is "fiat money" and why is it not backed by anything?

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The answer to this question is not as simple as it seems. The answer to this question is very important. Because in today's world, modern, so-called "fiat money" is the reason for the rapid development of some states and the lack of development of others.

Without a modern sovereign financial system, it is almost impossible not only to win the struggle for dominance on the planet, but simply to win a worthy place on it.

This is our new joint material with Professor of the Academy of Geopolitical Problems Anatoly Aslanovich Otyrba.

No one will deny that it is impossible to overestimate the role of money in the life of mankind, and even a schoolchild can give an exhaustive (in his opinion) answer to the question of what money is. But to the question of what “fiat money” is, what is its peculiarity and nature, few people, even from among the financiers, will answer. Fiat money is modern, unsecured money, just numbers announced as money by its creator (issuer).

Even people who understand the nature, functions and political role of fiat money do not know that they are a powerful source of energy that affects all spheres of human life. Development is impossible without them, and in their absence, any programs, projects and plans, even the most ingenious ones, are destined to remain only intentions. It is fiat money that is the most powerful, all-pervading weapon that provides an opportunity in modern conditions, both for expansion in order to capture foreign economies, market spaces and wealth, and for protection from outside encroachments. But with all this, in Russia money is considered only as an economic instrument and is perceived only as a quantitative category. They, as a political instrument, do not appear in any available document, at any level of government, in the context of ensuring security.

What is even more regrettable - in no Russian university is knowledge about money as a factor in ensuring the development and security of the state taught. This is due to the fact that in the Russian-speaking science there is no systemic knowledge about the nature of modern fiat money, many of their economic functions and political role. There is no knowledge about the process of their creation (emission), as well as about the resulting share premium, which ensures the economic efficiency of the state, respectively, its political competitiveness.

And this is happening at a time when ensuring the security of the state from military threats is becoming an increasingly costly task, and Russia's relations with its main geopolitical opponents are becoming more and more tense. Without overcoming the gap in this knowledge, and without creating a system capable of ensuring the financial self-sufficiency and competitiveness of the state, it will be very difficult for Russia to maintain political sovereignty. This article is specifically about modern, fiat money, as a key factor in ensuring the development, competitiveness and security of the state.

Let's not be distracted by the history of money, by how their qualitative characteristics have changed, shifting the balance of world forces and changing the principle of the world order. Let's start with the latest revolution, which radically changed their nature, functions and political role, and at the same time completely dropped out of the sphere of attention of Russian (then Soviet) science. It happened on August 15, 1971, when the dollar, by that time already fulfilling the role of a global measure of value and the main unit of account, was decoupled from gold backing. As a result, a fundamentally new situation has arisen in the world, when the role of the global measure of value and the main unit of account began to be played by fiat currency - the so-called. the US dollar, which is just the numbers announced by the money of its issuers. It is issued by a private structure called the Federal Reserve System, based in the United States and controlled by the World Financial Oligarchy (MFO). (Therefore, it would be correct to call this currency "FRS dollar" and not "US dollar"!)

Today, almost half a century later, few people realize that the August 1971 event is the greatest scam in the history of mankind. And immeasurably greater than if a piece of rubber belonging to some "Ostap Bender" were recognized as the standard of length! From that moment on, the dollar became for its issuers - the World Financial Oligarchy (MFO), a tool that allows latent robbery of humanity. This is due to a number of reasons, the main ones of which are:

• lack of understanding by humanity of the nature of fiat money, their economic functions and political role;
• the complexity of the architecture of the world financial system and the principle of its functioning;
• monopoly formation by MFOs of the rules for the functioning of the world financial system;
• the purchase of the most talented people by MFOs around the world, with the aim of using them to misinform humanity about everything related to fiat money in general and the dollar in particular, as a world currency, as well as the principles of the world financial system.

All of the above is the MFI's biggest secret. After all, the creation of the world's fiat money is nothing more than a realized dream of the alchemists: the creation of wealth virtually "out of nothing"! Moreover, significantly improved. Alchemists tried to turn a substance into gold or to extract a precious metal from any substance. Accordingly, they were limited by the existing physical volume of these substances. Today, dollar issuers create money "out of nothing" and in any amount. And since they are just virtual numbers, the creators can instantly move them around the world without any restrictions. The only limiting factor is the threat of inflation, which they have learned to minimize by importing it and, with the help of various kinds of latent financial technologies, transfer it to the currencies of other countries.

Rice. 1. Scheme of creating money for non-deliverable futures

Scheme 1. allows for the example of only one financial instrument - non-deliverable futures [1], to understand:

a) the device of the mechanism for creating fiat money; b) that the entire financial and banking system, including the emission center, is a single, centralized infrastructure controlled by the MFO;

c) the principle of the functioning of the mechanism for creating fiat money and the mass of commodities performing the function of an instrument for their absorption, which is necessary to curb inflation;

d) the method of absorption and sterilization of the money supply;

e) that the pricing of all exchange commodities (including oil) is not a spontaneous phenomenon formed by the “invisible hand of the market”, but a man-made, regulated process fully controlled by the IFI.

Having imposed the principle of capitalist development on the world and entangled it with the metastases of the global financial system, the MFI, which determines the world monetary policy, buys up the world's wealth and seizes control over the world economy and market. Only the economies and markets of China and India remain outside its control, or rather partially controlled through the financial systems.

Rice. 2. The classical scheme of the functioning of economic systems under capitalism.

Scheme 2. shows the classic scheme of the functioning of economic systems under capitalism, as seen and explained by Russian-language science. In reality, the architecture of the system and the principle of its functioning are fundamentally different. The financial system (three left, lower "floors"), controlled by the MFO, is self-sufficient, capable of generating money and creating capital on its own. It is very important to understand that all the capitals in the system (regardless of their legal affiliation) are strictly controlled by the MFO, and act exclusively within the framework of the unspoken rules determined by it.

The capital team will go and create, go and create.

The team will destroy, they will go and destroy.

If a command comes in to create and buy, then they will create and buy.

And all the methodologies for the implementation of the assigned tasks have been worked out to the smallest detail. Moreover, everything is being bought up - technologies, production assets, market spaces, health care and education systems, the most talented individuals, politicians, political parties, state leaders and the states themselves!

An analysis of both of the above schemes allows us to conclude that the course of development of the modern world economy is determined not by states, as is commonly believed, but by the IFI, which solves this problem through control over the world financial system and the emission of major world currencies. Hence, an even more important conclusion follows - that the main actors of global politics are not the officially recognized subjects of international law - states, but an invisible, supra-state structure, called in the United States a "deep state" - IFIs. It is she who is today the main beneficiary of the economic activity of mankind. The US state, which is considered a global hegemon, is just the basic territory of the IFI, which it uses as a forceful tool to coerce humanity.

This is most clearly manifested in the example of the United States, where today the forces supporting Trump and representing the interests of the American state have "grappled", and the so-called. The deep state is a force that advocates for the interests of MFIs. At the same time, as the practice of their confrontation shows, MFIs have no less chances of winning, which testifies to the power of money as a weapon in global competition.

The only force practically outside the control of MFIs is the elite of China, which, having understood the nature, functions and role of the fiat dollar, not only created a system of protection against it, but, having embarked on the implementation of the program of “internationalization of the yuan,” entered into competition with the “owners of the dollar”. It is this invisible, but rapidly intensifying competition between MFIs and the Chinese elite, which is capable of escalating into a hot war at any moment, and is today the main threat hanging over humanity.

But whatever happens in the world, we, Russians, cannot but be interested in the position and role of Russia in the current system of world order. Due to the fact that the financial system, which is considered to be Russian, is under the control of the IFI, this “allowed” it to integrate Russia into the global financial system on absolutely powerless conditions. As a result, the Russian Federation became part of the global colonial system. I must say that the Russian elite is gradually coming to understand the essence of what is happening. The country's leadership, judging by individual signs, is trying to take the financial system out of the control of MFIs and decolonize the country. But due to the lack of knowledge necessary for this in the country, there is no one to set a correctly formulated goal and objectives. In addition, there are no specialists among the financial authorities who are able to implement them.

Having recently begun to move away from dollars as foreign exchange reserves, instead of starting to issue rubles against the security of national wealth and government bonds, the management of the Bank of Russia simply decided to replace dollars with yuan. That is, having left the dollar, which served as an instrument of robbery, it began to use the yuan in this capacity. In other words, instead of ensuring financial sovereignty by refusing to be a colony of the owners of the dollar, the leadership of the Central Bank only creates conditions for the replacement of exploiters.

This can be explained by only two reasons - betrayal, or the lack of understanding by the Bank of Russia management of the nature, functions and role of modern money. We believe that, most likely, it acts in accordance with the instructions of the IMF and the BIS (Basel Committee), not realizing that there is no need for foreign currencies as reserves to ensure the stability of the national currency at all. That the presence of reserves in foreign currency is a condition imposed by the MFI on the countries under its control, with the aim of exporting dollar inflation and simplifying the process of robbing them.

There are many other examples of unprofessional actions of the Russian monetary and financial authorities that increase Russia's dependence on MFOs and restrain its development, but we believe that these are more than enough to understand that the country needs forced decolonization.

In this regard, the question arises - what to do and where to start. It is clear that you need to start with the correct goal setting, namely, the adoption of the Financial Doctrine, which should spell out the goals and objectives of the monetary and financial authorities and the financial and banking system as a whole. Their main task should be to ensure financial self-sufficiency and security, which is a prerequisite for ensuring the political independence and security of the state.

In this regard, the financial and banking system, being a structure that ensures the security of the state, should function in the same way as the system that ensures its security from military threats functions.

The state should have a "financial commander-in-chief" who should sit not in the Central Bank, but in the Kremlin

It is necessary to finalize the "Strategy of the economic security of the Russian Federation for the period up to 2030", approved by the Decree of the President of the Russian Federation No. 208 of May 13, 2017, and the "Strategy of the national security of the Russian Federation", approved by the Decree No. 683 of 2015-31-12, since they do not reflect the current the state of the monetary and financial system of Russia, and the danger posed by its financial dependence, which poses a threat to political sovereignty, is far from fully taken into account. The emission center (Bank of Russia), which is the heart of the state's economic system, must be sovereign, and no foreign structures must be allowed to participate in its activities and audits. The emission of money should be strictly controlled by the legislative branch, as well as by the departments and persons responsible for ensuring the security of the state. The Security Council should have a financial security department, and at number one, since ensuring all other forms of security depends on the availability of high-quality money from the state in the amount necessary to ensure its financial independence and competitiveness. Under the leadership of the Security Council, there should be a research institute that identifies and analyzes all new trends - methodologies and technologies related to money and capital formation processes that can affect the competitiveness of the national currency, on which the degree of efficiency of the national economy depends.

It is necessary to significantly improve the quality of financial education. In the universities of Russia, it is necessary to start teaching knowledge about money concerning not only the level of money circulation, but also the emission level, where they should be considered as a tool for ensuring the financial, economic and political security of the state.

Since fiat money, unlike physical money, is a product of human intellectual activity, in Russia it is necessary to create an infrastructure that provides the possibility of systematic creation of high-quality, competitive money in the volumes required for the country;

The main economic instrument of Russia, the ruble, must become a sovereign currency, which requires a change in the principle of its creation. It should be issued not through the purchase of foreign currencies (as is happening now), but under the security of formalized national wealth, as well as government programs, projects and securities

As for the functions of the national financial system, it should solve the following tasks:

1. Saturation of the national economy and the market with high-quality ruble stock in volume and on conditions that ensure their full functioning and development;
2. Creation of conditions for intensive education of competitive national investment capital denominated in rubles;
3. Ensuring the financial security of the state through the regulation of capital activities. Capital, both domestic and foreign, should enter and exit the Russian market only in the interests of Russia.

Without the fulfillment of these tasks, and without ensuring financial sovereignty, Russia has practically no chances to implement not only the last May Presidential Decree, but also to win the sanctions war. In the newly begun arms race, the capital intensity of which will by orders of magnitude exceed the cost of the race lost by the USSR, there is essentially nothing to do without financial sovereignty. After all, the Soviet Union lost this "race" due to a lack of resources. But when asked - which ones, it turns out that they are financial. This means that at first the USSR lost the financial war, which has already resulted in a defeat in the arms race! And therefore, today it is necessary to promptly take all the necessary measures to prevent Russia from repeating the fate of the USSR.

Anatoly Otyrba, Professor at the Academy of Geopolitical Problems

Nikolay Starikov, economist, leader of the Patriots of the Great Fatherland movement

[1] Non-deliverable futures - a derivative financial instrument - a standard forward exchange-traded contract for the purchase and sale of an underlying asset, at the conclusion of which the parties (the seller and the buyer) carry out only cash settlements in the amount of the difference between the contract price and the actual price of the asset as of the date of its execution without physical delivery of the underlying asset. Upon its conclusion, the buyer must make an advance payment in the amount of 10% of the contract value. It is officially believed that it is used to hedge the risks of changes in the price of the underlying asset and for speculative purposes, but for money issuers it is a way to create a mass of commodities in the form of futures, which serve as an instrument for providing money supply, as well as its absorption from the process of inflating stock bubbles. markets that impair their value when they collapse.