Fiat currencies in the 20th century: monetary catastrophes unfolding at varying speed since the birth of the Federal Reserve.

The currency system is based on coercion: directly via the legal tender laws (which decree that fiat currency must be used/accepted for all payments of debt) and indirectly via the value imputed to government debt which rests on the faith in the government’s ability to extort enough future tax revenue to be able to repay its debt.

Government bonds are the tally sticks of our age, and serve as the main ‘backing’ of bank notes and their digital counterparts in circulation. They are what is tying the government and the banking system together, via the central bank. The central bank has the power to ‘monetize’ such debt by creating money out of thin air. This roundabout way of going about it is an essential part of the confidence game, the creation of the illusion of value.

Inflation is nothing but a cleverly disguised tax. If the government had to actually raise taxes instead of borrowing the staggering sums of money it uses, it would have to raise taxes by so much that it would face a rebellion.