What is Fiat Money? Home Stored Gold IRA Explains

At Home Stored Gold IRA, we believe in the value of real, tangible assets like gold and silver. But if our currency isn’t tied to the value of gold, what kind of value does it have? Like other countries, the US dollar is fiat money, a phrase you made have seen a few times in some of our previous blogs. But what is fiat money? Home Stored Gold IRA explains.

What Is It?

For those who aren’t familiar with finance, the name “fiat money” might sound cryptic, but the explanation is fairly simple. Fiat money is money that has no built-in value of its own but has been declared legal tender by the government.

While the paper dollars you carry in your wallet, purse, or pocket are worth a certain amount determined by the current economic climate, in themselves, they are worth nothing – just pieces of paper (or, more specifically, a mix of cotton and linen). This is unlike gold or silver, which do have their own intrinsic value – which is why Home Stored Gold IRA recommends investing in them.

Why Is It Used Now?

So, if fiat money has no real value in a physical sense, why do we use it as currency? In previous blog entries, Home Stored Gold IRA has already covered the abandoning of the gold standard, which is when the US – and eventually the entire world – moved to using fiat money.

The reason for this shift was that, theoretically, fiat money offers more stability under a strong government. This gives the Federal Reserve more control over the value of money, meaning that, in an economic crisis, they have somewhat more control over the impact that crisis might have financially.

What Are The Problems?

If fiat money is more stable, then why do groups like Home Stored Gold IRA recommend investing in precious metals? The key is in the word “theoretically” that we used to explain why the world uses fiat money.

Much of the strength and stability of fiat money, and so a nation’s currency, is based on faith. Faith in the economy, the markets, and that currency can maintain its value. But, as we saw in the housing crisis in the first decade of the 2000s, this stability is not a guarantee.

Looking at fiat money globally, you can find many examples of countries where hyperinflation has destroyed any value in their currency, putting the people in those countries through the financial wringer for years.

A Gold IRA With Home Stored Gold IRA

Investing in a gold IRA, buying gold or having silver investments is a reliable way to avoid economic challenges should the value of fiat money fall on hard times.

At Home Stored Gold IRA, we’re here to help you secure your own future, as well as that of your family for generations to come, by making use of the steady, reliable and consistent value of precious metals. Contact Home Stored Gold IRA today.

By | 2017-09-05T12:05:00+00:00 May 22nd, 2017|Gold in the News|