Here is our guy Cullen tearing it up over at PragCap:
“One thing we constantly hear all over the media is how “all fiat money systems in history have failed”. This is just not correct. By my count, there are several hundred fiat regimes in existence today. What has failed and will always fail is fixed exchange rate regimes and commodity based monetary systems. As far as I know, there is not a single one around today that has stood the test of time. The gold standard has always failed. And it will always fail due to inherent constraints that make it a very poor monetary design.
Now, you might not agree with the reasons why commodity systems fail (I explain the simple unsustainable trade trends that generally results in the collapse of such monetary regimes here), but when someone says “all fiat monetary systems fail” they are forgetting to also mention the fact that all commodity based monetary systems have also failed. Oh, and they’re ignoring the fact that hundreds of fiat systems still exist. So no, all fiat monetary systems have not failed. And if you live in any developed nation your bank account or wallet is living proof of this fact.And yes, saying all fiat systems will eventually fail is pointless. One day the Earth will explode in a ball of fire also. But that doesn’t tell us much about how to benefit from or utilize the current monetary system during our lifetimes….”
“…For instance, trade deficit nations are at an inherent weakness when attempting to respond to recession because the trade imbalance results in rising unemployment and falling output and prices – an inherently deflationary environment.”